China's sovereign wealth fund Central Huijin Investment Ltd. will make a strategic investment in HENGFENG BANK CO. Ltd. as part of a market-oriented restructuring process, Shanghai Securities News reported Aug. 8, citing unnamed sources.
The restructuring process is led by the local government of China's Shandong province. Central Huijin's investment is expected to boost the bank's capital adequacy ratio and improve its governance. The People's Bank of China as well as the China Banking and Insurance Regulatory Commission will provide policy support for the restructuring, according to the report.
The sources did not disclose size of the investment. Investors have been concerned about increasing risks posed by small Chinese banks such as Hengfeng Bank following the takeover of troubled Baoshang Bank Co. Ltd. by the government in May.
The Shandong-based bank has failed to publish its earnings results since the third quarter of 2017, according to its statements posted on the National Interbank Funding Center.