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recently, the bank of shanghai issued an announcement on litigation matters, filing a lawsuit against defendants related to the "baoneng group" over a financial loan contract dispute.

the announcement involves a total of two cases. the amounts involved are the loan principal of rmb 3.4772 billion and rmb 3.899 billion, as well as the corresponding interest, overdue liquidated damages, and all expenses incurred in realizing the creditor's rights.

it is understood that the bank of shanghai has classified the two credit facilities involved in this lawsuit as non-performing at the end of 2021. the announcement reminded that the two credit facilities have corresponding collateral and the company has fully made impairment provisions. it is expected that this litigation will not have a significant impact on the company's current or subsequent profits.

people close to the bank of shanghai revealed to brokers china that the bank’s risks involving baoneng real estate have been basically cleared.

nearly 7.4 billion recovered

on september 27, the bank of shanghai announced that its shenzhen branch had sued shenye logistics, baoneng real estate co., ltd. (hereinafter referred to as "baoneng real estate"), and baoneng landmark richer limited (baoneng landmark richer limited) on the grounds of a financial loan contract dispute. the lawsuit filed by land runtai co., ltd. (hereinafter referred to as "baoneng land"), shenzhen baoneng investment group co., ltd. (hereinafter referred to as "baoneng group"), baoneng holdings (china) co., ltd., and yao zhenhua has been received in guangdong notice of case acceptance by the high court.

in this lawsuit, the amount involved is approximately 7.4 billion yuan. the entities are all shum yip logistics, and all of them are currently overdue.

looking back at the specific case details, in september and october 2018, the shenzhen branch of the bank of shanghai lent rmb 1.5 billion and rmb 2.3 billion to shenye logistics respectively through the subscription of trust funds, with the maturity dates being september 26, 2021 and 2021 respectively. october 18th. the guarantee method is that shum yip logistics and baoneng real estate provide real estate mortgage guarantees, baoneng real estate provides equity pledge and other guarantees, and baoneng group provides joint and several liability guarantees.

as of the filing date, shum yip logistics still owed rmb 3.4772 billion in principal and interest.

another loan recovery also occurred in 2018. in december 2018, the bank's shenzhen branch lent 4 billion yuan to shum yip logistics through the subscription of trust funds, with an expiration date of june 17, 2022. the guarantee method is that shum yip logistics provides real estate mortgage guarantee and rental accounts receivable pledge guarantee, baoneng real estate provides real estate mortgage guarantee, and baoneng holdings, yao zhenhua, and baoneng group provide joint liability guarantee respectively.

as of the filing date, shum yip logistics still owed rmb 3.899 billion in principal and interest. "in view of the failure of shenye logistics and others to fulfill their obligations to repay principal and interest or assume guarantee liabilities, the shenzhen branch of the bank of shanghai filed a lawsuit with the guangdong higher people's court in accordance with the law," the announcement said.

public information shows that shenye logistics belongs to the "baoneng department" and is 74.09% owned by shenzhen jushenghua co., ltd. (hereinafter referred to as "jushenghua"). the controlling shareholder of jushenghua is baoneng group, with a shareholding ratio of approximately 67.4%. yao zhenhua directly holds 99.9% of baoneng group’s shares.

in this case, the bank of shanghai filed eight claims, including an order to order shenye logistics to immediately repay the principal of the above-mentioned loan, and to pay the owed interest and overdue liquidated damages until the loan is fully repaid, as well as to dispose of the mortgaged real estate and directly pay the debtor collect the above-mentioned accounts receivable from shum yip logistics in order to give priority to the bank's claims and other claims within the scope of the creditor's rights. in addition, the bank also requested the court to order baoneng group to assume joint and several liability for the repayment of all the amounts in the two cases; baoneng holdings and yao zhenhua requested that for the second loan of 3.899 billion yuan, shum yip logistics should pay all the funds bear joint and several liability for liquidation.

real estate risks continue to clear

this announcement from the bank of shanghai emphasized that it has strictly followed regulatory regulations and classified the two credit facilities involved in this lawsuit as non-performing by the end of 2021. the two credit facilities have corresponding collateral and the company has fully made impairment provisions. it is expected that the litigation will not have a significant impact on the company's current or subsequent profits.

the reporter noticed that, in fact, in october last year, the lawsuit between the bank of shanghai and torgis group and baoneng group also attracted attention in the industry. according to the semi-annual report of the bank of shanghai, the case involved a loan principal of 2.58 billion yuan, and interest of approximately 128.7 million yuan, penalty interest of 85 million yuan, etc., and the overall litigation target reached 2.8 billion yuan. the case is currently in court at the end of june this year and has not been decided yet.

in recent years, with the overall downturn of the real estate industry, whether it is a large state-owned bank, a joint-stock bank, a city commercial bank, or a rural commercial bank, there have been problems involving the aftermath of real estate corporate loans.

at the state council press conference not long ago, li yunze, director of the state administration of financial supervision, said that my country's financial industry, especially large financial institutions, is currently operating steadily and risks are controllable. as the three major risks of real estate, local debt, and small and medium-sized financial institutions are gradually resolved and mitigated, financial risks are steadily converging.

judging from the mid-term reports of a-share listed banks in the first half of this year, asset quality is generally stable, real estate risks continue to be cleared, and risk resistance continues to increase. this is still a trend.

specific to the bank of shanghai, in addition to the bank's recent announcement of litigation involving the baoneng group, which stated that it had fully made impairment provisions as early as 2021, the bank's 2024 semi-annual report showed that at the end of the reporting period, the leasing and business services industry the asset quality of the real estate, water conservancy and environment and public facilities management industries has improved, and the non-performing loan ratio has decreased by 0.04 percentage points, 0.72 percentage points, and 0.03 percentage points respectively from the end of the previous year. in particular, the real estate industry has strengthened the active management of large risk businesses. and increase the resolution and disposal of existing risks, which has shown a continuous downward trend in the past three years.

data show that as of the end of june, shanghai bank’s real estate industry loan balance was 119.89 billion yuan, accounting for 8.42% of total loans, non-performing loans were 1.665 billion yuan, a decrease of 35.94% from the end of the previous year, and the overall non-performing rate was approximately 1.39%, a decrease from the end of the previous year. 0.72 percentage points.

provision for impairment is sufficient

in addition to risk management and control of the real estate business and the reduction of non-performing loans, the bank of shanghai has strictly controlled the provision of risk impairment. the bank's semi-annual report shows that bank of shanghai adheres to strict asset classification, adequate risk exposure, actively resolves risks, and makes objective and reasonable provision for impairment losses on loans and advances.

as of the end of june this year, the balance of shanghai bank's loan and advance impairment provisions was 46.276 billion yuan, an increase of 1.001 billion yuan from the end of the previous year. during the reporting period, provision for impairment of loans and advances amounted to rmb 4.296 billion, a year-on-year decrease of rmb 894 million, or 17.23%. at the same time, all dues were verified, and rmb 4.301 billion was written off during the reporting period.

it is worth noting that in addition to the provision for impairment of loans, bank of shanghai also made provision for estimated liabilities for pending litigation. the bank's 2024 semi-annual report shows that in the first half of the year, the amount of pending litigation and adjudication cases in which bank of shanghai was the respondent was approximately 1.215 billion yuan. after careful study, the cases involved and the possible losses were confirmed as estimated liabilities.

in terms of capital markets, according to data from tonghuashun, the share price of bank of shanghai has increased by more than 30% since the beginning of the year, ranking second only to bank of nanjing and bank of hangzhou among leading a-share city commercial banks.