June 24, 2019 / 8:10 AM / 3 months ago

Bank of Beijing pays $364 mln debt on behalf of troubled Citic Guoan

BEIJING, June 24 (Reuters) - Bank of Beijing, a guarantor of a loan by Citic Guoan Group, said it had helped the conglomerate repay 2.5 billion yuan ($364 million) in debt, raising concerns about risk management practices at regional banks.

The asset quality and general health of China’s regional banks have been closely scrutinised by investors and markets after Chinese regulators seized Inner Mongolia-based Baoshang Bank last month, citing “severe credit risks.”

Bank of Beijing, partly owned by ING Bank N.V., said late on Friday that it had repaid fully the principal and interest on an obligation borne by debt-ridden Citic Guoan.

The Beijing-based conglomerate failed to repay any of the debt to its creditors by June. 20 as required, according to Bank of Beijing’s statement filed to Shanghai Stock Exchange.

In Mid-March, Citic Guoan missed the quarterly interest payment of the debt, forcing Bank of Beijing to help the group pay 39.45 million yuan.

Bank of Beijing said the repayment didn’t mean irrecoverable losses for the lender.

Shares in the Shanghai-listed bank dropped 0.34% to 5.94 yuan on Monday.

China Lianhe Credit Rating Co downgraded Citic Guoan’s long-term credit rating in April to A with a negative outlook, citing liquidity problems and refinancing difficulties.

Citic Guoan has total assets of 198.2 billion yuan as of end-March, and has 20.4 billion yuan of short-term loans coming due within a year, its quarterly report showed.

The quality of assets held by regional banks is under growing pressure due to cooling economic growth and a government crackdown on their off-balance sheet business. ($1 = 6.8706 Chinese yuan renminbi) (Reporting by Cheng Leng and Ryan Woo; Editing by Simon Cameron-Moore)

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