Fuzhou-based Industrial Bank has announced the launch of its own debt-for-equity subsidiary.
Industrial Bank plans to invest 10 billion yuan in the launch of the fully invested Industrial Bank Financial Asset Investment Co., Ltd. (全资设立兴银金融资产投资有限公司) to serve as a specialist vehicle for its debt-for-equity swap business and accompanying support operations.
According to an official announcement made on 21 December because the investment is not an affiliate transaction or large-scale asset restructuring, there is no need to seek the approval of the general shareholders assembly, and the deal will not have a major impact upon the bank’s capital adequacy ratio or other key financial indices.
Industrial Bank is still waiting for approval from the relevant regulatory agencies, and has also said that it will give consideration when appropriate to introducing other domestic or overseas strategic investors.
Aside from the big fig estate-owned bank Industrial Bank is the second domestic Chinese bank that plans to launch a debt-for-equity swap subsidiary, after Hong Kong listed Guangzhou Rural Commercial Bank (广州农商行) unveiled similar plans on 14 December.
In February last year Industrial Bank became the first Chinese lender to establish its own asset management company, in the form of Industrial Asset Management Share Co., Ltd. (兴业资产管理股份有限公司) which has registered capital of 3 billion yuan.
Should the bank obtain approval to establish Industrial Bank Financial Asset Investment Co., Ltd. it will possess two independent licenses to engage in debt-for-equity swaps operations.