ICBC becomes troubled Chinese bank’s top shareholder

China steps up support of struggling lenders as country’s biggest bank backs Jinzhou

China’s biggest bank has stepped in to become the largest shareholder of a troubled Hong Kong-listed lender, the latest sign that the state is increasing its financial support for struggling banks across the country.

Industrial and Commercial Bank of China said on Sunday that one of its subsidiaries would invest up to Rmb3bn ($436m) in Bank of Jinzhou, taking a stake of about 10.82 per cent.

Investors have grown concerned over the health of the Chinese bank

ing system in recent weeks following the government takeover of Baoshang Bank, the first such incident in nearly two decades.

Large state institutions are often expected to swoop in to save troubled companies or banks if it is feared they present a larger risk to the financial system. ICBC said in a statement on Sunday that the investment in Jinzhou was intended to serve “national supply-side reform”.

The bailout of Baoshang, which was once controlled by kidnapped tycoon Xiao Jianhua, has left investors and money market traders questioning whether more troubled lenders, such as Jinzhou, would receive similar treatment.

“Talks of potential restructuring of Bank of Jinzhou has reignited contagion fears and concerns about the health of China’s financial system,” Barclays analysts said in a note to investors on Friday, before the ICBC investment was announced.

Based in China’s northeastern rust belt province of Liaoning, Bank of Jinzhou has not published 2018 annual results as required by disclosure rules in Hong Kong, where it listed in 2015.