Three Commercial Banks in China Await Stock Exchange’s Approval to Initiate IPO in Hong Kong

Published Date : Oct 26, 2015

Three of the Chinese commercial banks, the Bank of Jinzhou, the Bank of Zhengzhou, and the Bank of Qingdao, are eagerly waiting for the approval of the stock exchange for US$2 bn in IPOs in Hong Kong over the next few months, in a bid to test the appetite of investors for stocks that are exposed to the increasing level of non-performing loans in China.

The road, however, doesn’t seem smooth for these banks. Among the three, the bank of Jinzhou that lent money to Hanergy Group, the troubled solar firm, is already facing a tough time, recovering its money.

On the other hand, the shares of small-cap banks in China have done well in 2015. The level of the non-performing loans is also relatively low in these banks. However, the continual slowing down of the Chinese economy has heightened the risk level for bad loans in these banks.

Mr. Jimmy Leung, the leader of China banking and capital market at PricewaterhouseCoopers, stated that the city commercial banks have disbursed a relatively lower amount of bad debts as compared to state-owned banks. However, the equations are changing now and the city commercial banks have started showing an upward movement in the rate of NPLs.

The Bank of Jinzhou had to revise and refile its listing application as regulators have serious concerns regarding the loan it has lent to Hanergy, a solar-equipment manufacturer in China. The Bank of Qingdao and the Bank of Zhengzhou joined the last queue for the approvals for IPOs in Hong Kong in the previous week.

A company requires the approval from the stock exchange in Hong Kong before the initiation of its public offering in the country