China Railway Investment to Acquire 12% Stake in Bank of Hainan

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The investment vehicle of China’s state-owned railway company has agreed to acquire a sizeable stake in the top regional lender for Hainan Province.

China Railway Investment Co., Ltd. (中国铁路投资有限公司) (CRI) will acquire 360 million shares in Bank of Hainan, equivalent to 12% of equity, from CEFC Shanghai International Group Limited.

The move means CEFC will withdraw completely as a shareholder in Bank of Hainan, while also making CRI the regional lender’s second biggest shareholder, once it obtains approval for the transaction from the China Banking and Insurance Regulatory Commission (CBIRC).

CRI is a wholly invested subsidiary of China State Railway Group – a state-owned sole proprietorship enterprise responsible for providing railway passenger and cargo transportation services.

Bank of Hainan is the only province-level commercial bank in Hainan Province, and officially commenced operation in 2015.

The lender was founded by Hainan Luhuitou Luye Investment Co., Ltd. (海南鹿回头旅业投资有限公司) with Bank of Communications as strategic investor, and a total of 12 shareholders contributing 4.08 billion yuan in capital.

Hainan Luhuitou is its largest shareholder with a 17% equity stake, while Haima Caiwu Co., Ltd. is the second biggest shareholder with a 12% equity stake.

Bank of Communications also holds a 10% equity stake, as does the Hainan Province government via its local investment vehicle.

CRI and Bank of Hainan also recently executed a strategic cooperative agreement, with a CRI executive pointing out that the transaction will create a “comprehensive strategic cooperative relationship” between the two parties.

Bank of Hainan’s 2019 financial report indicates that its operating revenues rose 1.47% YoY last year to reach 983 million yuan, while its net profits rose 29.26% YoY to reach 242 million yuan.

In 2019 the bank’s total assets expanded 43.71% to reach 53.674 billion yuan, while its non-performing loan ratio stood at 0.98% as of the end of last year.

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