An announcement exposed Bank Of Nanjing Co.Ltd(601009) (601009. SH)’s intention to control Suning consumer finance through equity transfer. As the original shareholder of Suning consumer finance, a few years ago Bank Of Nanjing Co.Ltd(601009) intended to withdraw and apply for the establishment of a consumer finance company, but it failed in the end.
On January 13, Bank Of Nanjing Co.Ltd(601009) announced that the board of directors of the bank considered and approved the proposal on the acquisition of controlling shares in participating financial institutions. The acquisition has yet to sign a formal agreement, and the follow-up needs to be approved by the regulatory authority.
“The participating financial institution is Suning consumer finance, but the specific transaction details are not clear.” An Bank Of Nanjing Co.Ltd(601009) insider told the 21st Century Business Herald reporter. Bank Of Nanjing Co.Ltd(601009) relevant people told the 21st Century Business Herald reporter that everything is subject to the announcement information, and there is no more information to provide at present.
This means that, similar to Bank Of Ningbo Co.Ltd(002142) , Bank Of Nanjing Co.Ltd(601009) also gave up the way of applying for the establishment of a consumer finance company by itself and chose to obtain the controlling right of a consumer finance company directly through equity transfer.
According to the statistics of the 21st Century Business Herald reporter, among the 30 consumer finance companies currently operating, the number of banking consumer finance companies has reached 19, of which 14 have the background of shareholders of urban commercial banks (excluding Bank Of Ningbo Co.Ltd(002142) , Bank Of Nanjing Co.Ltd(601009) ).
“There may be two reasons for the active layout of consumer finance companies by urban commercial banks. One is the rapid development of consumer finance business in recent years. The layout of consumer finance companies by urban commercial banks can better expand their own consumer finance business; the other is that urban commercial banks can break through regional restrictions and expand their business scope through the layout of consumer finance companies.” Li Guangzi, director of the banking research office of the Institute of finance of the Chinese Academy of Social Sciences, analyzed the reporter of the 21st Century Economic Research Report.
From proposed withdrawal to proposed holding
According to the regulatory information, Suning consumer finance was approved to open in May 2015 with a registered capital of 300 million yuan. Suning cloud business group and Bank Of Nanjing Co.Ltd(601009) hold 49% and 20% respectively, which are the first and second largest shareholders respectively. In October 2016, the registered capital of Suning consumer finance was approved to increase to 600 million yuan, but Bank Of Nanjing Co.Ltd(601009) did not participate in the capital increase in the same proportion. The shareholding ratio was diluted to 15%, and another enterprise rose to the second largest shareholder, holding 16%.
In September 2018, the 21st Century Business Herald reporter quoted a number of people from Bank Of Jiangsu Co.Ltd(600919) industry as saying that Bank Of Nanjing Co.Ltd(601009) was not very satisfied with the operation of Suning consumer finance, and Bank Of Nanjing Co.Ltd(601009) had a consumer finance center, so he intended to quit Suning consumer finance and apply for a licensed consumer finance company by himself.
The news that can be used as evidence is that in July 2018, Chen Ming, general manager of Suning consumer finance, returned to Bank Of Nanjing Co.Ltd(601009) after the expiration of his term of office. Previously, Chen Ming served as general manager of Bank Of Nanjing Co.Ltd(601009) consumer finance center. In August 2019, Liu Feng, an executive from Suning Jinfu, became the general manager of Suning consumer finance.
The performance of Suning consumer finance may also be one of the reasons why Bank Of Nanjing Co.Ltd(601009) plans to withdraw. According to the financial report of Suning.Com Co.Ltd(002024) (002024. SZ), by the end of June 2021, the total assets of Suning consumer finance were 1.115 billion yuan and 2.393 billion yuan by the end of 2020; In the first half of 2021, the operating revenue and net profit were 106 million yuan and – 34.017 million yuan respectively.
From the perspective of industry, among the 14 consumer finance companies that disclosed the performance in the first half of 2021, Suning consumer finance had the lowest net profit and was the only one with negative net profit; From its own perspective, the net profit of Suning consumer finance from 2016 to 2020 was -189 million yuan, 217 million yuan, 45.321 million yuan, 10.112 million yuan and – 49.718 million yuan respectively.
In March 2020, some media reported that Bank Of Nanjing Co.Ltd(601009) was applying for the establishment of a consumer finance company and was under regulatory approval, but there was no further information so far.
Bank Of Nanjing Co.Ltd(601009) did not explain why the attitude of Bank Of Nanjing Co.Ltd(601009) was reversed and the reasons for the proposed holding of Suning consumer finance. It only said that the acquisition had yet to be signed a formal agreement, and the follow-up needed to be approved by the regulatory authority.
“The process of self built consumer finance companies is relatively long. The established consumer finance companies have a certain foundation in customer accumulation, business model, science and technology system construction, human resources and other aspects, which is convenient for business development.” Li Guangzi told the reporter of the 21st Century Economic Research Report.
City commercial banks have arranged one after another
At the end of 2021, Bank Of Ningbo Co.Ltd(002142) obtained 70% equity of Huarong consumer finance through public bidding, and signed the transaction contract of unlisted state-owned property rights of financial enterprises with China Huarong. If there is no accident, Bank Of Ningbo Co.Ltd(002142) will officially control Huarong consumer finance. Previously, Bank Of Ningbo Co.Ltd(002142) also proposed to establish a consumer finance company, but failed.
According to the statistics of the 21st Century Business Herald reporter, among the 30 consumer finance companies currently operating, the number of banking consumer finance companies has reached 19, of which 14 have the background of shareholders of urban commercial banks. Among the head city commercial banks, Bank Of Beijing Co.Ltd(601169) , Bank Of Shanghai Co.Ltd(601229) , Bank Of Jiangsu Co.Ltd(600919) have their own consumer companies. Other city commercial banks include Zhongyuan bank, Shengjing bank, Bank of Hubei, Shanxi commercial bank, Zhangjiakou bank, Mongolian Commercial Bank, Bank Of Chengdu Co.Ltd(601838) , Bank Of Hangzhou Co.Ltd(600926) , Bank of Harbin, Bank Of Changsha Co.Ltd(601577) and Chang’an bank.
Why are city commercial banks keen on the layout of consumer finance? Li Guangzi analyzed the reporter of the 21st Century Economic Research Report and said that there may be two reasons: on the one hand, the consumer finance business has developed rapidly in recent years. The layout of urban commercial banks and consumer finance companies can better expand their own consumer finance business; On the other hand, the exhibition of consumer finance companies is not subject to geographical restrictions. With the tightening of Internet loan business by regulatory authorities, urban commercial banks are limited to carry out remote business through Internet loans. In this case, urban commercial banks can break through regional restrictions and expand their business scope by arranging consumer finance companies.
In February 2021, the CBRC issued the notice on further regulating the Internet loan business of commercial banks, which requires strict control over cross regional operations and makes it clear that local corporate banks shall not carry out Internet loan business across the jurisdiction of their registration.
According to the report on the sustainable development of China’s consumer finance industry released by the 21st century Asset Management Institute, a think tank of Nanfang finance and economics all media group, the consumer finance industry will still be a blue ocean in the future. Although facing multiple challenges, licensed consumer finance companies may usher in new development space after non licensed institutions are vigorously rectified and dismissed and strict regulatory policies are frequent, The exit of non licensed institutions also gives more market space, forming a market pattern dominated by licensed institutions and Internet head platforms.
\u3000\u3000 “Since the end of last year, the regulatory authorities have strengthened the supervision of financial technology companies, especially the Internet head platform, restrained the rapid expansion of credit business and the improvement of industry concentration of the head platform, and reduced regulatory arbitrage through unified regulatory requirements. Consumer finance companies can take advantage of their advantages on the capital side, cooperate with shareholders\’ resources, and take the opportunity to improve the competitiveness of consumer finance companies in consumer finance Market share of the industry. ” The report said.
