As uncertainty mounts over the future of China’s real estate market, a bank now appears to be caught up in the crisis. Founded in 1996, shares of China Minsheng Banking Corp have now fallen due to its loans to debt-ridden companies such as China Evergrande. Over the past year, the bank’s share price has fallen 22.9% on the Hong Kong Stock Exchange, from 5.19 to 4.
This drop in the share price is the worst of Bloomberg’s 155-member global banks index.
As reported by Bloomberg, Minsheng has an estimated $ 27 billion (£ 19 billion) exposure to developers such as Evergrande.
This number represents 27% of its high-end capital.
According to reports, the bank has invested around $ 8 billion (£ 5.8 billion) in Evergrande as of 2020.
Chairman Gao Yingxin, who joined Minsheng from the Bank of China, said, “Ten years ago, we were the pearl in the crown, but now our gap with our peers is widening.
“Corporate governance will go from myopia to the long term. “
The bank’s overall exposure to real estate companies is believed to be $ 65 billion (£ 47.5 billion).
Shen Meng, director of Chanson & Co., a Beijing-based boutique investment bank, added, “The pursuit of high growth and high returns for its private shareholders has prompted the bank to undertake many high-end investments. risk.
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China Evergrande and Kaisa Group Holdings Ltd, two of the country’s largest, both defaulted last year, causing turmoil in the market.
Previously, Mattie Bekink of the Economic Intelligence Unit told the BBC: “What happens from here has consequences not only for the Chinese economy, where there are concerns about liquidity pressures. and stress in the real estate and interbank markets, but for the global economy. “
If other real estate companies fail to repay their bonds, there are fears that lenders across the financial system will be scared off.
Evergrande has accumulated debt of up to £ 226.9 billion and was forced to delay payment on a $ 157 million (£ 114 million) offshore bond in January 2023.