Shengjing Bank to sell $24 billion worth assets to local government-backed entity

China’s Shengjing Bank said on Wednesday it has agreed to sell a portfolio of assets, including certain loans and investments, among others, for 176 billion yuan ($24.07 billion) to Liaoning Asset Management.

Liaoning Asset will fund the purchase of assets by issuing special-purpose notes to the bank, the lender said.

The bank, based in the northeastern Chinese city of Shenyang, expects an unaudited provision for impairment of about 7.7 billion yuan, it said, adding that the deal will improve its asset quality and lower non-performing loan ratio.

Liaoning Asset, which focuses on transactions of non-performing assets of financial institutions, is a unit of Liaoning Financial Holding owned by the finance authority in the Chinese province of Liaoning, where Shengjing Bank is based.

Last month, Shengjing Bank reported a 21.8 per cent drop in its net profit attributable for half-year to 737.9 million yuan. Its net interest income for six months slipped 1.3 per cent to 15.32 billion yuan.

Its net interest margin – a key gauge of profitability – stood at 1.22 per cent in the Jan-June period, versus 1.30 per cent a year ago, according to its half-yearly report.

($1 = 7.3105 Chinese yuan renminbi)