Small and medium-sized banks have big moves again!
On January 16, Bank Of Nanjing Co.Ltd(601009) announced that it planned to negotiate the equity transfer with some shareholders of Suning consumer finance (hereinafter referred to as “Suning consumer finance”), and if the subsequent transfer is successful, it is expected to obtain the controlling right of Suning consumer finance. Previously, Bank Of Ningbo Co.Ltd(002142) acquired 70% equity of Huarong consumer finance for RMB 1.091 billion and obtained the consumer finance license.
According to analysts’ prediction, with the gradual improvement of the credit investigation system and the joint pull of both supply and demand, it is expected that the balance of consumer credit (excluding housing loans) of Chinese residents is expected to reach 28 trillion yuan in 2025.
Industry insiders said that consumer finance companies are national licenses and can operate across regions, which has high license value for regional small and medium-sized banks. According to incomplete statistics, of the 30 consumer finance companies currently operating, 14 have the background of shareholders of small and medium-sized banks.
Bank Of Nanjing Co.Ltd(601009) intends to hold Suning Xiaojin
According to the announcement of Bank Of Nanjing Co.Ltd(601009) , on January 13, the board of directors of the bank considered and approved the proposal on acquiring the controlling right of participating financial institutions, and planned to acquire the controlling right of Suning Consumer Finance Co., Ltd. However, the acquisition counterparty and transaction proportion have not been determined, the bank has not signed an equity transfer agreement with any shareholder of Suning Xiaojin, and the subsequent acquisition needs to be approved by the regulatory authority
Image Source: Bank Of Nanjing Co.Ltd(601009) announcement
Statistics show that up to now, Bank Of Nanjing Co.Ltd(601009) holds 15% shares of Suning Xiaojin, Suning.Com Co.Ltd(002024) holds 49% shares of Suning Xiaojin, Xiansheng zaikang Jiangsu pharmaceutical holds 16% shares of Suning Xiaojin, BNP Paribas personal finance holds 15% shares of Suning Xiaojin and Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) holds 5% shares of Suning Xiaojin.
As of June 30, 2021, Suning Xiaojin had a registered capital of 600 million yuan, total assets of 1.115 billion yuan and shareholders’ equity of 537 million yuan; From January to June 2021, the operating revenue was 106 million yuan and the net profit was – 34 million yuan.
As of June 30, 2021, the proportion of Suning Xiaojin’s total assets to Bank Of Nanjing Co.Ltd(601009) total assets was 0.07%, and the proportion of shareholders’ equity was 0.47%; From January to June 2021, Suning Xiaojin’s operating revenue accounted for 0.52% of Bank Of Nanjing Co.Ltd(601009) operating revenue, and its net profit accounted for – 0.40%.
small and medium-sized banks have targeted consumer finance company licenses
In recent years, a number of small and medium-sized banks have aimed at consumer finance company licenses.
On December 27, 2021, China Huarong announced that it planned to transfer 70% equity of Huarong consumer finance to Bank Of Ningbo Co.Ltd(002142) . The announcement shows that the appraisal price of Huarong consumer finance equity transferred this time is RMB 727 million, and the final transfer price is RMB 1.091 billion.
The latest prospectus disclosed by Huzhou bank also shows that the bank plans to apply for the establishment of a consumer finance company characterized by green finance.
On March 1, 2021, Bank Of Jiangsu Co.Ltd(600919) announced that Jiangsu Banking and insurance regulatory bureau had approved the opening of Bank Of Jiangsu Co.Ltd(600919) subsidiary Suyin Kaiji Consumer Finance Co., Ltd.
According to incomplete statistics, 30 consumer finance companies have been established, of which 19 are banking (the bank is the largest shareholder), and the vast majority are regional small and medium-sized banks, including Bank Of Beijing Co.Ltd(601169) , Bank Of Shanghai Co.Ltd(601229) , Bank Of Jiangsu Co.Ltd(600919) , Zhongyuan bank, Shengjing bank, Shanxi Bank, mengshang bank, Bank Of Hangzhou Co.Ltd(600926) , Harbin Bank, etc.
In addition to banks, Internet companies are also “admirers” of consumer finance companies. According to the reply of Sichuan banking and Insurance Regulatory Bureau on September 2, the registered capital of vipshop Fubang consumer gold is 500 million yuan. Among them, vipshop contributed 249.5 million yuan, accounting for 49.9% of the registered capital; Tebu invested 125.5 million yuan, accounting for 25.1% of the registered capital; Fubon Huayi bank contributed 125 million yuan, accounting for 25% of the registered capital.
China International Capital Corporation Limited(601995) said that after nearly 10 years of explosive development, China’s consumer credit industry has gradually transitioned to a new stage of steady growth. Looking forward to the future, with the gradual improvement of the credit investigation system and the joint pull of both supply and demand, it is expected that the balance of consumer credit (excluding housing loans) of Chinese residents is expected to reach 28 trillion yuan in 2025. In addition, with the changes in the regulatory environment, the continuous expansion of the supply side of consumer loans and the transformation of the main role of industry participants, the share of consumer finance companies as capital in the consumer loan market is expected to increase rapidly.
However, the development of the industry still faces considerable pressure. In August 2021, many consumer finance companies received guidance from the regulatory window that the personal loan interest rate should be fully controlled within 24%. However, the comprehensive capital cost of consumer finance companies is high, and the profitability of some companies will face challenges. Seeking lower cost funds has become the key to development.
