Central Huijin Investment takes control of troubled HF Bank, change management
Aug 09, 2019 (China Knowledge) - Central Huijin Investment, a subsidiary of the China Investment Corporation, will invest in troubled HengFeng Bank. The investment is a breakthrough in the debt restructuring of the troubled lender.
Huijin’s investment will increase HengFeng’s capital adequacy ratio, and keeping it afloat. The shake-up could improve the troubled bank’s management and enhance its operational capability, according to a report by Shanghai Securities News.
It is the third financial institution among those city-level and rural lenders that had been called upon by the authorities for restructuring since May. The regulators step in to clean up financial malfeasance and profligate lending.
HengFeng Bank is also the second of those troubled banks to be supervised by the government which were linked to the Tomorrow Group of the fugitive financier Xiao Jianhua.
According to the China Banking & Insurance Regulatory Commission, the financial empire once owned stakes in hundreds of Chinese listed companies through proxies, including at least 10 banks. Additionally, it had misappropriated large sums from Baoshang bank which led to severe credit risks, forcing the central bank to take over.
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