Hankou Bank receives large fines: Several executives have been fined together and are still rushing to listing

Recently, the Hubei Regulatory Bureau of the State Financial Regulatory Administration disclosed the administrative penalty information disclosure form, showing that Hankou Bank Co., Ltd. (hereinafter referred to as "Hankou Bank") and a number of senior executives were punished, including the chairman of the bank. Among them, Hankou Bank was fined 2.65 million yuan.

According to the fine, Hankou Bank's violations of laws and regulations were: failing to strictly approve business in accordance with the requirements of credit review for customers in different places; Inaccurate five-level classification of loans; Multiple line inspections failed to detect potential risks in time; Internal audit did not reflect significant risk liability issues; Employee behavior investigation fails to cover all employees in accordance with regulations; Failure to report case (risk) information as required.

Based on this, Hankou Bank was fined 2.65 million yuan, Chen Xinmin, then secretary of the party committee and chairman of the board, Ding Rui, then secretary of the board of directors, and Yang Derong, then deputy general manager of the credit review department, were all warned and punished, and the date of the penalty decision was September 25, 2023.

In addition, the Fruit Lake Branch of Hankou Bank was fined 1 million yuan by the Hubei Supervision Bureau of the State Financial Regulatory Administration for violations of laws and regulations such as imprudent pre-loan investigation and post-loan management. During the same period, Xu Xin, then assistant president of Hankou Bank and president of the Fruit Lake branch, was banned from working in the banking industry for life.

Not only that, Liu Zhijian, then the account manager of the business office of the Fruit Lake branch of Hankou Bank, was banned from working in the banking industry for 10 years, Kang Zheng, the relationship manager of the branch, was banned from working in the banking industry for 5 years, Wang Long, the relationship manager of the branch, was banned from working in the banking industry for 2 years, and Ye Yufei, vice president of the branch, Chen Hua, assistant to the president of the branch, and Sun Liang, assistant manager of the comprehensive management department of the branch, were all warned.

It is worth mentioning that Hankou Bank is still sprinting to list. In June this year, the Hubei Securities Regulatory Bureau announced the basic situation of the counseling work of companies planning to issue IPOs in its jurisdiction, and Hankou Bank was among them. According to Bedo Finance, the bank signed a counseling agreement with Haitong Securities as early as 2010, and has not yet completed the counseling and submitted a prospectus.

In contrast, Hubei Bank Co., Ltd. ("Hubei Bank"), also based in Hubei, pre-disclosed its prospectus on 4 November 2022 in preparation for listing on the main board of the Shanghai Stock Exchange. On March 3, 2023, Hubei Bank moved to the Shanghai Stock Exchange to submit its listing application.

In 2019, 2020, 2021 and the first half of 2022, Hubei Bank's revenue was RMB8.119 billion, RMB7.918 billion, RMB7.673 billion and RMB4.555 billion, net profit was RMB1.898 billion, RMB1.318 billion, RMB1.756 billion and RMB1.244 billion, and net profit after deduction was RMB1.926 billion, RMB1.326 billion, RMB1.718 billion and RMB1.215 billion, respectively.

According to the 2022 annual report of Hubei Bank, the bank's operating income in 2022 was about 8.937 billion yuan and its net profit was about 2.156 billion yuan, an increase of about 16% and 23% respectively over 2021. By the end of 2022, the total assets of Hubei Bank reached 403.5 billion yuan, an increase of about 20% from the end of 2021, exceeding 400 billion yuan.

As of the end of 2022, Hubei Bank's non-performing loan ratio was 1.97%, a decrease of about 0.28% from 2.25% at the end of 2021. As of the end of 2022, Hubei Bank's total loans were about 217.498 billion yuan, of which about 213.204 billion yuan were normal loans and about 4.294 billion yuan were non-performing loans.

Bedo Finance found that the asset scale of Hankou Bank is higher than that of Hubei Bank, and has exceeded 500 billion yuan. According to Hankou Bank's 2022 annual report, as of the end of 2022, the bank's total assets were about 505.731 billion yuan, about 100 billion yuan higher than Hubei Bank.

However, the scale of Hankou Bank's revenue and net profit is not as large as that of Hubei Bank. In 2022, Hankou Bank's operating income will be about 8.370 billion yuan, and the net profit attributable to the parent and net profit after deduction will be 1.953 billion yuan and 1.895 billion yuan, respectively, which are lower than those of Hubei Bank in the same period.

From the perspective of equity structure, the situation of Hankou Bank and Hubei Bank is similar, the equity is relatively scattered, and there is no controlling shareholder. As of the end of 2022, the top three shareholders of Hubei Bank are Hubei Hongtai Group, Hubei Communications Investment Group and Changjiang Industrial Investment Group, with corresponding shareholding ratios of 19.99%, 17.64% and 8.00% respectively.

During the same period, the top three shareholders of Hankou Bank were Legend Holdings, Wuhan Iron and Steel Group and Wuhan Financial Holdings (Group) Co., Ltd. (controlled by Wuhan State-owned Assets Supervision and Administration Commission), with corresponding shareholding ratios of 15.33%, 13.34% and 11.44% respectively. In addition, Wuhan Development and Investment Co., Ltd. and Wuhan Municipal Bureau of Finance are also important shareholders of Hankou Bank, all of which are controlled by the Wuhan State-owned Assets Supervision and Administration Commission.

According to the 2022 annual report of Hankou Bank, the bank's operating income in 2020 and 2021 was 5.602 billion yuan and 6.801 billion yuan respectively, and the net profit after deduction was 1.228 billion yuan and 1.070 billion yuan respectively. It is not difficult to see that the performance of Hankou Bank is also continuing to grow.

In 2020, 2021 and 2022, Hankou Bank's capital adequacy ratio was 11.82%, 12.29% and 11.24%, the provision coverage ratio was 136.52%, 135.45% and 140.63%, and the non-performing loan ratio (non-performing loan ratio) was 2.93%, 2.85% and 2.64%, respectively.

Hankou Bank said in its 2022 annual report that in 2022, the bank's board of directors will deliberate and approve major strategic matters such as information technology strategic planning, comprehensive risk management strategic planning, business plan, institutional development plan, rolling capital planning, capital management plan, capital replenishment and use plan, and matters related to issuance and listing.

In addition, the board of directors of Hankou Bank also formulated the "Articles of Association of Hankou Bank Co., Ltd.", "Rules of Procedure of the General Meeting of Shareholders of Hankou Bank Co., Ltd." and "Rules of Procedure of the Board of Directors of Hankou Bank Co., Ltd." applicable after listing in accordance with the needs of corporate governance and standardized operation.

At present, Chen Xinmin is the chairman of Hankou Bank, Liu Bo is the vice chairman and president, Ding Rui is the secretary of the board of directors and the head of finance, Sun Zhengbai and Lei Fengxin are the vice presidents, Jia Wenqing is the temporary vice president, Zhan Tianle is the chief risk officer, and Ruan Xuzhou, executive director and vice president, has reached retirement age in March 2023.