The landlocked province of Sichuan has just seen the opening of the largest municipal bank in China following the merger of two ailing regional lenders.
Bank of Sichuan (四川银行) held the ceremony for the commencement of official operation on the afternoon of 7 November in the Sichuan province capital of Chengdu, in tandem with the signing of agreements with 18 companies for the provision of a 60 billion yuan credit quota.
Regulators gave their approval to the establishment of Bank of Sichuan on 9 September, categorising it as Sichuan’s first “province-level legal person municipal commercial bank.”
The newly founded lender is the product of a merger between Liangshanzhou Commercial Bank (凉山州商业银行) and Panzhihua Municipal Commercial Bank (攀枝花市商业银行), and has registered capital of 300 billion yuan, making it the largest municipal bank in China.
Liangshanzhou first unveiled plans to merge with Panzhihua in June of this year, following widespread concern about the health of China’s smaller regional banks amidst a spate of potential bank runs and bank failures since May 2019.
At the time Liangshanzhou Commercial and Panzhihua Municipal were amongst eight banks in China that had failed to provide annual reports for the past two years, with the others including Baoshang Bank (包商银行), Ordos Bank (鄂尔多斯银行), Hengshui Bank (衡水银行), Bank of Tieling (铁岭银行), Xinjiang Huihe Bank (新疆汇合银行) and Ningbo Donghai Bank (宁波东海银行).
Both Liangshanzhou Commercial and Panzhihua Municipal also had conspicuously high non-performing loan (NPL) ratios according to their most recent financial reports.
Liangshanzhou Commercial commenced operation in May 2007 following the conversion of the Liangshanzhou City Credit Society into a joint-stock municipal commercial bank, and was categorised as a regional financial institution whose main share controller was the local government.
As of the end of 2017 Liangshanzhou Commercial’s total assets were 29.974 billion yuan, while its non-performing loan ratio was 3.57% and its provision coverage ratio was 157.03%. Its net profits for 2017 were 18.7248 million yuan.
Panzhihua Municipal was established in November 1997 with registered capital of 1.562 billion yuan.
As of the end of September 2019 its total assets were 74.909 billion yuan, with a normal deposit balance of 53.04 billion yuan, and a total loan balance of 42.164 billion yuan.