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this first batch of pilot private banks will have their equity auctioned again. according to alibaba's judicial auction platform, a company's 6.5% equity in huarui bank will be publicly auctioned on september 20, with a starting price of 136.5 million yuan. on september 11, a beijing business daily reporter learned that the holder of the equity is shanghai jianzhiqiao enterprise development co., ltd. (hereinafter referred to as "jianzhiqiao"), the fifth largest shareholder of huarui bank.

in recent years, huarui bank's founding shareholders have frequently reduced their holdings or withdrawn from the market. the bank has also suffered huge net losses and once ranked last among the 19 private banks. in 2023, although huarui bank turned losses into profits, it is still at the bottom of the private bank camp. after experiencing the equity "reshuffle", can huarui bank return to the ranks of "pioneers"?

the fifth largest shareholder may face changes

another large amount of huarui bank shares is about to be auctioned. according to alibaba's judicial auction platform, a company's 6.5% stake in huarui bank will be auctioned for the first time on september 20, with a subscribed capital of 195 million yuan. the starting price of the shares is 136.5 million yuan, a 30% discount from the assessed price.

on september 11, a beijing business daily reporter checked huarui bank's annual report and found that the equity holder was the bank's fifth largest shareholder, jianzhiqiao, which held 195 million shares.

jianzhiqiao acquired a stake in huarui bank in 2015 and is one of the bank's founding shareholders. prior to the equity auction, the 195 million shares were pledged and frozen. in june 2022, jianzhiqiao pledged 195 million shares, accounting for 100% of its total shares in huarui bank. thereafter, the shares were frozen in march 2023. huarui bank restricted jianzhiqiao's voting rights at shareholders' meetings and its dispatched directors at the board of directors in accordance with regulatory requirements.

regarding the reasons and impact of the equity auction, on september 11, a relevant person in charge of huarui bank said in an interview with a beijing business daily reporter that the equity auction was caused by the shareholders' own debt disputes. the bank is closely following the auction process and will actively cooperate with the subsequent work such as equity changes based on the final auction results. the equity auction has no impact on the bank's normal operations.

in recent years, huarui bank's equity has undergone an internal "reshuffle", with original founding shareholders frequently reducing their holdings or exiting the market. among them, shanghai metersbonwe fashion co., ltd. (hereinafter referred to as "metersbonwe fashion") and shanghai guoda construction group co., ltd. (hereinafter referred to as "guoda construction") sold 114 million and 303 million shares of huarui bank respectively due to their respective business needs. the above shares were all transferred to shanghai kaiquan pump industry (group) co., ltd. (hereinafter referred to as "kaiquan pump industry"), which is also a founding shareholder.

after the transfer, in march 2023, kaiquan pump industry replaced metersbonwe as the second largest shareholder of huarui bank, metersbonwe fell to sixth place, and guoda construction withdrew from the top ten shareholders. at the same time, due to its own operating problems, another founding shareholder, gan shang united co., ltd. (hereinafter referred to as "gan shang united"), had its loan repaid by shanghai juneyao international plaza co., ltd. (hereinafter referred to as "juneyao plaza") as a guarantor. gan shang united held 244.5 million shares of huarui bank, which failed to be sold at auction several times, and was finally passively transferred to juneyao plaza. according to huarui bank's annual report, as of the end of 2023, the shareholder qualifications of juneyao plaza have not yet obtained regulatory approval.

beijing business daily reporters noticed that juneyao plaza is a subsidiary of shanghai juneyao (group) co., ltd. (hereinafter referred to as "juneyao group"), the largest shareholder of huarui bank. the two together hold 38.15% of the shares of huarui bank.

"huarui bank is about to auction 6.5% of its shares, which may lead to further changes in the shareholder structure and have a certain negative impact on the bank's reputation." wang hongying, director of the china (hong kong) financial derivatives investment research institute, said that frequent changes in the equity of the top ten shareholders will affect the stability of the corporate governance structure. juneyao group and its affiliates hold a large proportion of shares, which will help stabilize huarui bank's governance structure, but attention should be paid to the impact of a single shareholder's concentrated shareholding on the rights and interests of small and medium shareholders.

a relevant person in charge of huarui bank said that the bank will continue to improve equity management, enhance corporate governance capabilities, and maintain equity stability.

personal loans account for more than 80%

according to the official website, huarui bank is the first private bank in the country and the first in shanghai. it received approval for its establishment from the former china banking regulatory commission in september 2014 and officially opened in may 2015.

since its establishment, huarui bank has focused its strategy on inclusive finance. smart supply chain finance, digital inclusive finance and travel finance are the bank's three core strategic businesses.

however, in 2022, huarui bank was also constrained by its core strategic business, and its net profit ranked last among the 19 private banks. during the reporting period, the bank achieved operating income of 970 million yuan, a year-on-year decrease of 39.42%; its net loss after tax was 341 million yuan, a year-on-year decrease of 252.46%. huarui bank also became the only bank among the 19 private banks that suffered a loss that year.

"due to the impact of various changes in the external environment in 2022, small and micro enterprises are facing uncertainties in their operations, and their development expectations and financing needs have decreased. our bank's asset business has been greatly affected, especially the scale of credit issuance in the core business supply chain has been affected; at the same time, the reduction in consumer travel demand has led to our bank's differentiated and characteristic exploration of consumer credit issuance in aviation travel scenarios has also been affected." a relevant person in charge of huarui bank explained the loss of net profit in 2022.

however, in 2023, huarui bank's performance rebounded, with operating income of 1.463 billion yuan, a year-on-year increase of 50.76%, and net profit turned from loss to profit to 53 million yuan.

behind the high growth is the continued expansion of huarui bank's retail loan business. from 2021 to 2023, huarui bank's personal loans and advances were 13.205 billion yuan, 16.518 billion yuan, and 25.803 billion yuan, accounting for 48.28%, 65.78%, and 81.55%, respectively. in contrast, the bank's corporate loans continued to shrink, with corporate loans and advances of 12.672 billion yuan, 8.493 billion yuan, and 5.743 billion yuan, accounting for 46.33%, 33.82%, and 18.15%, respectively.

as for the reason for the rapid growth of retail loan business, the relevant person in charge of huarui bank said that it was mainly due to the strong recovery of the domestic air travel market. the bank relied on the air travel service scenarios of its shareholders to continuously enrich its retail credit products and continue to focus on travel finance business. beijing business daily reporters noted that as of the end of 2023, huarui bank's "air travel loan" had cumulatively issued 18.07 million loans, an increase of 14.08% from the end of the previous year.

how to catch up?

huarui bank is one of the first five private banks established. in march 2014, the former china banking regulatory commission launched a pilot program for private banks. subsequently, webank, minshang bank, jincheng bank, mybank and huarui bank were successively established. as of 2020, the private bank camp has expanded to 19.

over the past decade, the 19 private banks have mainly focused on inclusive finance and technological finance. however, due to their different strategic positioning and business priorities, their performance has also shown great differentiation.

in 2023, although huarui bank turned losses into profits, it still ranked low among the 18 private banks that have submitted their "report cards" (jiangxi yumin bank has not yet disclosed it), with net profit only surpassing xin'an bank and ranking 17th. webank, the earliest established, ranked first with a net profit of 10.815 billion yuan. mybank, minshang bank, and jincheng bank, which were established at the same time as huarui bank, also ranked in the top ten of private banks in terms of net profit.

as one of the "pioneers" of private banks, how can huarui bank, which has "fallen behind", catch up? in an interview with a beijing business daily reporter, a relevant person in charge of huarui bank said that the bank will focus on three strategic businesses, namely smart supply chain finance, digital inclusive business and travel finance, continue to make efforts in inclusive finance, digital finance and technology finance, continue to explore green finance and pension finance, earnestly do a good job in the "five major articles", and deepen the financial supply-side reform.

"in recent years, huarui bank's overall performance has been average, ranking at the bottom among private banks of the same type. however, some of its business sectors have developed rapidly, and its traditional business has also developed steadily. it turned losses into profits last year." jinle function analyst liao hekai said that huarui bank has penetrated the local market, actively grasped the market trends, exerted its private bank's decision-making advantages to compete in a staggered manner, and actively expanded small and micro customers with the help of financial technology. it has formed a certain accumulation in inclusive financial business, achieved breakthroughs in personal loan business and continued to increase its volume. in the future, it should actively optimize the inclusive financial structure and form industry advantages.

wang hongying believes that huarui bank has maintained steady growth for most of the time since its establishment, but it faces competitive pressure from national banks in the lower-tier markets and challenges from the real economy. in the future, it still needs to continue to optimize its governance structure, enhance its risk management capabilities, strengthen its comprehensive financial services capabilities, and enhance its competitiveness through diversified services.

beijing business daily reporter li haiyan