It is difficult for executives to take a long time, why Zhongyuan Bank has become a "regular auction customer"

Less than 9 months after officially taking up his post, the "deputy marshal" of this trillion-dollar city commercial bank resigned. On October 8, Zhongyuan Bank issued an announcement that due to work adjustments, Wang Jiong resigned as vice chairman of the bank's second board of directors, less than nine months after he officially assumed the position of vice chairman. Before Wang Jiong, Xu Nuojin, who also served for less than two years due to job transfers, resigned as chairman of Zhongyuan Bank.

Normal job transfers and the successive investigations of former executives have made the management of Zhongyuan Bank change more frequently, and large amounts of equity frequently appear on the auction stage, and it is difficult to find "buyers" for many shares, which also makes this trillion-dollar city commercial bank a "frequent auction customer". In the view of analysts, a number of equity discount auctions of Zhongyuan Bank are still auctioned, to a certain extent, reflecting investors' concerns about the frequent changes in the bank's short-term executives and internal governance issues, in addition, there are also certain bottlenecks in the development of the industry's business, and how the business can further serve the regional economic development still needs to be broken in the future.

The vice chairman resigned after less than one year in office

On October 8, Zhongyuan Bank issued an announcement that due to work adjustments, Wang Jiong resigned as vice chairman of the bank's second board of directors, executive director, chairman of the consumer rights protection committee of the board of directors, and resigned as an executive director candidate for the third board of directors of the bank.

It is reported that Wang Jiong's qualification as vice chairman of Zhongyuan Bank was officially approved in January this year, according to which Wang Jiong's term as vice chairman is less than 9 months. However, before becoming vice chairman, Wang Jiong had worked for Zhongyuan Bank for many years, having been in the position since the bank's establishment in 2014, serving as chairman of the risk management committee and president.

Regarding Wang Jiong's resignation, Zhongyuan Bank said that Wang Jiong's resignation will not affect the operation of the board of directors in accordance with the Company Law and relevant laws and regulations, and the bank will complete the election of the third board of directors as soon as possible in accordance with relevant laws and regulations and the relevant election procedures of the bank's articles of association, and will publish a separate announcement in due course.

In recent years, personnel changes in Zhongyuan Bank have been more frequent. In April this year, Xu Nuojin, who also served for less than two years due to job transfer, resigned as chairman and other positions, and on June 12, Guo Hao, who has both financial experience and government supervision experience, officially took over as chairman.

Before Xu Nuojin parachuted into office in November 2021, Dou Rongxing, the first "head" of Zhongyuan Bank, announced his resignation due to job adjustment, but soon after, it was reported that he was under investigation by liuzhi, and in June 2022, Dou Rongxing was "double-opened" for serious violations of duty and suspected of the crime of accepting bribes and illegally issuing loans.

In addition to Dou Rongxing, Zhao Weihua, former vice president of Zhongyuan Bank, and Wei Jie, vice chairman of Zhongyuan Bank, were successively investigated in 2022 for suspected serious violations of discipline and law, and in February 2023, Jia Jihong, former deputy supervisor of Zhongyuan Bank, was also subject to disciplinary review and supervision and investigation for suspected serious violations of discipline and law.

According to Liao Hekai, an analyst at Jinle Function, in recent years, the reasons for the frequent changes in the senior management of Zhongyuan Bank include internal adjustments, personal factors, and a series of changes caused by the investigation of senior executives. The successive downfall of a number of key executives reflects that Zhongyuan Bank has certain internal control problems and certain violations in the process of some business development.

Large equity frequently appears on the "auction table"

It is understood that Zhongyuan Bank was established in December 2014 by the merger of 13 city commercial banks, and is the only provincial corporate bank in Henan Province with branches covering the whole province. Less than three years after its establishment, the bank was listed on the main board of the Hong Kong Stock Exchange on 19 July 2017.

In 2022, Zhongyuan Bank absorbed and merged three banks in the province, Luoyang Bank, Pingdingshan Bank and Jiaozuo CTS Bank, and its asset scale ranked among the trillion city commercial banks.

However, the growth of asset scale has not changed the fate of Zhongyuan Bank as an "auction regular". According to Alibaba's judicial auction platform, since September, a total of 15 shares of Zhongyuan Bank have appeared on the "auction platform", many of which are difficult to find "buyers", and ended in auctions. In the near future, the bank will have 3 hundreds of millions of shares about to be auctioned or sold, respectively 100 million shares, 200 million domestic shares and fruits, and 288 million domestic shares, and the sale price or starting price is 7-9% off the appraisal price. Among them, 288 million domestic shares require buyers to be qualified as shareholders to bid for the above-mentioned shares.

In addition to the equity auction, the large equity of Zhongyuan Bank was also pledged and frozen. As of June 30, 6.832 billion domestic shares of Zhongyuan Bank were pledged, accounting for 18.69% of the total number of issued ordinary shares; In addition, about 2.764 billion domestic shares are subject to judicial freezing.

Liao Hekai believes that it is the norm that the equity of small and medium-sized banks is difficult to transact, and when the valuation of large banks is still at a historical low, most small and medium-sized bank stocks have high auction valuations, large single amounts, imperfect internal governance, poor operating conditions, and more litigation and debt risks, all of which are the reasons why the equity of small and medium-sized banks is not cared for. The frequent changes in the management of Zhongyuan Bank have made investors more risk-averse, and they need to wait for stability before they can consider their equity investment.

"A number of discount auctions of Zhongyuan Bank's shares are still auctioned, to a certain extent, reflecting investors' concerns about the frequent changes in the bank's short-term executives and internal governance issues," said Wang Hongying, president of China (Hong Kong) Financial Derivatives Investment Research Institute, adding that there are also certain bottlenecks in the development of Zhongyuan Bank's business, and in the future, how the banking business can further serve regional economic development still needs to be broken.

It's a long way back to A

Four years after successfully achieving its listing on the Hong Kong Stock Exchange, Zhongyuan Bank clarified the goal of "breaking through trillions, returning to A-shares, and launching a brand" in its 2021 annual report, and regarded the above goals as a strategic goal to promote in 2022. ”

However, in the 2022 annual report, although the goal of breaking through trillions has been achieved, the plan to return to A-shares has not appeared in the business strategy and development outlook as expected.

Liao Hekai believes that asset quality continues to decline, profitability continues to weaken, management is unstable, or Zhongyuan Bank has not mentioned the reasons for returning to A-shares.

Wang Hongying also said that Zhongyuan Bank did not mention the return to A-shares for the time being, it may be focusing on strengthening internal risk management, especially the adjustment of the governance structure, returning to A has higher requirements for the bank's corporate governance structure, and it is expected that after the bank's governance structure is further standardized, it will still re-propose the return to A-share plans.

In the first half of 2023, Zhongyuan Bank's total assets further increased, and as of the end of the reporting period, the bank's total assets were 1.36 trillion yuan, an increase of 2.7% over the end of the previous year. During the reporting period, the bank achieved operating income of 13.551 billion yuan, a year-on-year increase of 30.2%; The net profit attributable to shareholders of the bank was 2.002 billion yuan, a year-on-year decrease of 4.4%.

Asset quality also needs to be improved. As of the end of June, the non-performing loan ratio of Zhongyuan Bank increased by 0.26 percentage points from the end of the previous year to 2.19%, while the provision coverage ratio decreased by 6.57 percentage points from the end of the previous year to 150.51%.

Regarding the performance outlook and development prospects of Zhongyuan Bank, Liao Hekai said that the follow-up development prospects of Zhongyuan Bank need to see its consolidated assets and operation improvement, and further development trends may be seen only after the management is stable. If it can truly achieve the professional service, fine management, leading technology, efficient risk control, stable development and excellent structure, everything may fall into place.

A reporter from Beijing Business Daily contacted Zhongyuan Bank about changes in senior management, equity auctions, and the process of returning to A-shares, but did not receive a reply as of press time.

Beijing Business Daily reporter Li Haiyan