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Bank assets are experiencing a mixed bag: on the one hand, the share prices of the four state-owned banks continue to hit new highs, while on the other hand, the equity of some small and medium-sized banks has received no bids at auctions.

On August 22, a reporter from China Securities Journal found on Alibaba Auction and other platforms that Foshan Rural Commercial Bank, Shaoxing Bank, Xuchang Xinpu Village Bank, etc. The starting price for the equity of small and medium-sized banks is set at around 1 yuan.。

The reporter found that the 1 yuan starting price of the above-mentioned bank shares is mostly held by natural persons, and some of the shares are financial assets involved in criminal cases. The so-called 1 yuan starting price is mostly a gimmick to increase the attractiveness of the auction items, and ordinary bidders rarely succeed in "picking up bargains" at extremely low prices.

Bank equity starts at 1 yuan

The Alibaba auction platform shows that the 142,560 shares of Shaoxing Bank, with an estimated value of approximately 456,200 yuan, will be auctioned at 1 yuan starting at 10:00 on September 25. It is worth noting that bidders must be fully civil and be internal employees or natural person shareholders of Shaoxing Bank. As of August 22, the equity auction had attracted 4,987 onlookers, but only 2 people signed up.

Image source: Alibaba Auction Platform

"Basically, bank shares that can be auctioned at a starting price of 1 yuan are all criminal assets. This Shaoxing Bank share is the natural person share that has been seized, and the seizure period is from September 2023 to September 2026. Interested parties must personally verify with Shaoxing Bank or the regulatory authorities whether they meet the conditions for investment. Those who win the bid due to failure to meet the bidding qualifications will be subject to withdrawal according to law." The relevant person in charge told reporters.

Ren Tao, a senior researcher at the Shanghai Finance and Development Laboratory, told reporters that the 1 yuan starting price for bank shares is mostly a marketing tactic and the final transaction is often not at the starting price. Many judicial auctions artificially increase the attention of the auction items and attract bidders' attention by using extremely low amounts as the starting price.

In this regard, the reporter contacted Mr. Zhuang, an agent of a property rights trading company that operates a bank equity auction business. He said: "In reality, I have never seen a bidder successfully bid at a price of 1 yuan. Because the auction is a bidding process among applicants, it is unlikely that only one person will bid. There will always be others who will raise the price."

An agent from another property transaction company said that although the starting price was 1 yuan, some high-quality bank shares often went through multiple rounds of bidding, and the final auction price often returned to the actual value of the shares in the auction market, usually 30% to 50% of the appraisal price.

In addition, the reporter noticed that in some cases, the starting price is the unit price of the shares. For example, some shares of Xuchang Xinpu Rural Bank were successfully auctioned at a unit price of 1.34 yuan. The final transaction price of the transaction was agreed in advance to be 530,000 yuan, and the number of shares obtained by the bidder was calculated based on the unit price of the auction, that is, the number of shares obtained by the bidder this time was about 395,500 shares.

Small and medium-sized bank equity is frequently auctioned

In addition to the extreme 1 yuan starting price, many small and medium-sized bank shares have been sold at a discount on the auction platform this year. In early August, the shares of many banks such as Jiangsu Taizhou Rural Commercial Bank, Jiangxi Ganchang Rural Commercial Bank, Henan Nanzhao Rural Commercial Bank, Xinjiang Tianshan Rural Commercial Bank, and Shandong Laizhou Rural Commercial Bank were listed for sale on the auction platform.

Despite the repeated price cuts, there are still cases of unsold shares. For example, 500,000 shares of Jiangxi Ganchang Rural Commercial Bank were auctioned at 865,000 yuan in mid-July, but failed to sell because no one bid. In mid-August, the price of the shares dropped by more than 170,000 yuan and was auctioned at 692,000 yuan, but it still failed to sell.

Image source: Alibaba Auction Platform

When asked why the equity of small and medium-sized banks is frequently auctioned, Zhou Maohua, a macroeconomic researcher at the Financial Markets Department of China Everbright Bank, told reporters: "It is mainly because some small and medium-sized banks were previously operating in a rough manner, and a few banks had incomplete internal governance. Against the backdrop of changes in the macroeconomic and regulatory environment, some industries and enterprises are facing operational difficulties and increased pressure, which has led to the emergence of internal problems in a few banks, various debt disputes, etc., which has led to the auction of bank equity."

A staff member of Alibaba Auction Platform told reporters: "The main purpose of bidders buying small and medium-sized bank shares is to obtain dividend rights or participate in bank decision-making and governance. However, some small and medium-sized bank shares have neither dividend nor appreciation expectations nor can they bring other substantial returns, so the enthusiasm of bidders is not very high."

Ren Tao, a senior researcher at the Shanghai Finance and Development Laboratory, believes that the reason why some small and medium-sized bank shares are not in demand is that the market currently has a low degree of recognition for small and medium-sized bank shares. Real estate companies and Internet companies that were previously interested in small and medium-sized bank shares have been restricted at the policy level in recent years, and some state-owned enterprises have also been strictly restricted in holding financial shares, making the group that is both interested in small and medium-sized banks and meets the qualifications and regulatory guidelines smaller and smaller.

In fact, when investors or investment institutions purchase bank shares, they often focus on the operation and development prospects of these banks. Lou Feipeng, a researcher at the Postal Savings Bank of China, told reporters that for small and medium-sized banks, in addition to improving corporate governance and enhancing the standardization of operation and management, they also need to promote characteristic operations, improve operation quality and efficiency, and resist risks. On the issue of asset quality, the quality of new loans should be stabilized, the write-off of existing non-performing assets should be promoted, the existing assets should be revitalized in an orderly manner, and information disclosure should be done well to allow investors to have a better understanding of the development of banks.