Money Matters | After red flags raised by Beijing, Bank of Jinzhou’s Hong Kong listing is hard to swallow
The regulator rightfully doubted the bank’s risk when it first applied for listing in June
Hong Kong’s regulatory regime is disclosure-based, which means buyer beware. But the approval for the listing of Bank of Jinzhou is too hard to swallow.
The Liaoning-based bank is a “showpiece” of all the ills of city banks in mainland China.
Let us start with its aggressive, if not reckless, lending policy. One name tells all – Hanergy Group, which is under investigation by the Securities and Futures Commission after its spectacular fall from an eye-popping rally.
By June 30, the bank had loaned 9.4 billion yuan to Hanergy via all kinds of channels, except formal corporate lending.
There was about 6 billion yuan via the so-called beneficial interest transfer plan – a popular conduit among small banks to get around regulator’s interest rate and loan ratio controls. In return, Jinzhou got 7.6 per cent interest for six months
Like many of its peers, it went on to sell wealth management products on Hanergy to its clients to generate fee income.