Do small banks want to play the role of breaking away from home? The non-performing assets become the new start of fixed value added

category:Finance
 Do small banks want to play the role of breaking away from home? The non-performing assets become the new start of fixed value added


According to the information from the China Securities Regulatory Commission, as of July 22, this year, a total of 15 small and medium-sized banks have been approved, including 3 urban commercial banks, 11 agricultural commercial banks and 1 rural bank, involving a total amount of 22.7 billion yuan.

It is worth noting that, according to the directional issuance instructions, there are a number of agricultural commercial banks non-performing loan ratio and other related indicators lower than the regulatory red line. In addition, the sale of non-performing assets along with the fixed increase plan has become a new choice for some rural commercial banks to dump the burden.

15 small and medium banks

It is planned to increase 22.7 billion yuan in the year

As the second largest bank in the year, the Bank of Zhengzhou has been waiting for a full year from the proposal to the approval.

On July 17 last year, the Bank of Zhengzhou announced that it planned to issue no more than 1 billion A-shares and raise no more than 6 billion yuan to supplement core tier one capital.

In January, the bank received 12 questions from China Securities Regulatory Commission (CSRC) on the capital increase plan, including capital sources, related party transactions and corporate governance, financial management business risk, interbank business risk, off balance sheet business risk, etc.

According to the financial report, the core tier one capital adequacy ratio of Bank of Zhengzhou in 2018, 2019 and the first quarter of this year were 8.22%, 7.98% and 7.95%, respectively, gradually approaching the regulatory red line of 7.5%. In addition, the non-performing loan ratio was 2.47%, 2.37% and 2.35% respectively in the same period, which was one of the only two listed banks with non-performing loan ratio exceeding 2%.

According to the capital classification in the administrative measures of commercial banks, equity financing can directly supplement the primary capital. In addition to profit retention, listed financing, convertible bonds, fixed increase is the main way to supplement core tier one capital, so it is favored by many small and medium-sized banks in urgent need of blood toning.

According to the Statistics announced by the CSRC, as of July 22, this year, a total of 15 small and medium-sized banks have been approved, including 3 urban commercial banks, 11 agricultural commercial banks and 1 rural bank, involving a total amount of 22.7 billion yuan.

Among them, Bank of Hangzhou, Bank of Zhengzhou and Bank of Fuxin are the three city commercial banks that plan to raise the highest amount of funds, with the planned increase of 7.2 billion yuan, 6 billion yuan and 2.34 billion yuan, respectively; among the 11 agricultural commercial banks, Foshan agricultural commercial bank is the highest, with a planned fund-raising of 2.013 billion yuan; and Kunshan Lucheng rural bank plans to raise the lowest fund, which is 35.358 million yuan. It is found that the purpose of fund-raising is to supplement the banks primary capital and to dispose of non-performing assets.

In addition, there are six banks that have submitted the directional offering instructions (application draft), but have not been approved, including Zhangjiakou bank, Liaoning Dalian bank, Jiangxi Guangxin agricultural commercial bank, Hebei Yangyuan agricultural commercial bank, Qingdao mutual group agricultural commercial bank and Jincheng agricultural commercial bank. In addition, Changsha bank and Guiyang bank are also promoting the relevant fixed increase plan.

Pressure from regulatory indicators

According to regulatory requirements, by the end of 2018, the capital adequacy ratio, tier one capital adequacy ratio and core tier one capital adequacy ratio of systemically important banks shall not be lower than 11.5%, 9.5% and 8.5% respectively, while other banks shall be less than 1% on this basis, namely 10.5%, 8.5% and 7.5%.

In addition, according to the core risk supervision indicators of commercial banks (for Trial Implementation), the non-performing loan ratio should not be higher than 5%. According to the document issued by the CIRC in March 2018, the regulatory requirements for provision coverage ratio are adjusted from 150% to 120% - 150%, and the regulatory requirements for loan provision ratio are adjusted from 2.5% to 1.5% - 2.5%.

According to the reporters statistics, it was found that among the 15 banks approved for the fixed increase plan in the first half of the year, the regulatory indicators of five banks exceeded the red line.

From the perspective of capital adequacy ratio, non-performing loan ratio and provision coverage ratio, Jiangxi Fengxian rural commercial bank, Peixian agricultural commercial bank, Guangfeng agricultural commercial bank and Zezhou agricultural Commercial Bank of Shanxi Province are all below the standard. In addition, the provision coverage rate of Jiangxi Gongqing agricultural commercial bank is not up to the standard.

According to the annual capital increase ratio of CCB, CCBs core loan increase ratio and adequacy ratio in 2017 are respectively 54.54% and 24.75%, respectively.

In response to the inquiry of the CSRC, Fengxian rural commercial bank pointed out that there was no case of regulatory measures or administrative penalties taken by the banking regulatory authorities because some of the regulatory indicators failed to meet the regulatory requirements; as of the end of September 2019, the main regulatory indicators were significantly improved compared with the beginning of the year, and there would be no risk of regulatory penalties due to regulatory indicators failing to meet the regulatory requirements.

In March 2018, 2019 and 2020, the core tier 1 capital adequacy ratio of Guangfeng agricultural commercial bank was 10.24%, 6.86% and 5.71%, the non-performing loan ratio was 20.96%, 8.29%, 10.99%, and the provision coverage rate was 43.30%, 61.33% and 59.56%, respectively.

In the process of examination and approval, China Securities Regulatory Commission (CSRC) paid attention to the issue price of the directional offering of Guangfeng agricultural Commercial Bank of China at 2 yuan / share. It is planned to raise no more than 180 million yuan through directional issuance. Through telephone communication, the issuer used 90 million yuan to purchase non-performing assets, but it was not explained in the application materials.

In this regard, Guangfeng agricultural commercial bank said that the issue price and total amount of raised funds did not include the purchase of non-performing assets, of which 1 yuan / share (90 million yuan in total) was used as capital to enrich capital, enhance the ability to resist risks and development momentum; the other 1 yuan / share (90 million yuan in total) was included in the capital reserve.

There is mystery in fixed increase

Bad tie-in sale

In fact, in addition to Guangfeng rural commercial bank, there are also small and medium-sized banks that have been asked about tying bad assets in the fixed increase plan. From the first half of the year, fixed increase bundle sale of non-performing assets package has become a new play for some agricultural commercial banks to digest non-performing assets.

Wu Wen, a senior researcher at the financial research center of Bank of communications, pointed out that the majority of non-performing assets sold by fixed increase are small banks, which are not very common. The reason is that small banks have great pressure on asset quality in recent two years, and at the same time, they are facing urgent pressure of capital replenishment.

There are three banks approved for the fixed increase plan of tying non-performing assets. The agricultural Commercial Bank of Guangdong Sihui and the agricultural Commercial Bank of Zezhou in Shanxi Province are directly approved. One bank is Shandong Zhucheng rural commercial bank after being inquired by the CSRC.

Guangdong Sihui rural commercial bank said in the directional offering instructions that after comprehensive consideration of various factors, the price of the directional issue is 1 yuan / share, and the targeted issuance object needs to pay 1.50 yuan / share to purchase non-performing assets when subscribing for shares; the Shanxi Zezhou agricultural Commercial Bank expresses that the subscriber needs to invest 0.87 yuan to purchase the share of non-performing assets package for each share as the conditional consideration.

The CSRC pointed out that during the audit process, it was concerned that the issuance price and the total amount of raised funds disclosed by Shandong Zhucheng rural commercial bank included the purchase of non-performing assets. The applicant, in combination with the accounting treatment related to equity, should explain whether the statement of the issuance plan as the issuance price of 2 yuan / share and the total amount of raised capital not exceeding 300 million yuan is accurate.

Shandong Zhucheng rural commercial bank replied that the statement of the issuance plan as the issuance price of 2 yuan / share and the total amount of raised funds not exceeding 300 million yuan was inaccurate. The company has determined that the price of the directional issue is RMB 1.00/share, and the number of shares to be issued is no more than 150 million shares. The targeted issue object must pay RMB 1.00/share for purchasing the companys non-performing assets while subscribing for the shares.

When the banks operating environment is better and the equity is being scrambled, there are also cases of tying bad assets. A stock bank personage said that the banks non-performing assets package may involve houses, land, automobiles and securities, etc. for banks, loan write off needs to meet various conditions, and through tie-in, the disposal of non-performing assets can be realized without verification and loss of profits.

From the data of CBRC, in the first quarter of this year, the non-performing rate of rural commercial banks increased, and the capital adequacy ratio went down. The non-performing rate increased from 3.9% in the fourth quarter of last year to 4.09%, and the increase of 0.19 percentage point of non-performing rate ranked first in all bank classifications; the capital adequacy ratio decreased from 13.13% to 12.81%.