China steps up asset sales of Dajia Insurance

Dajia Insurance, known as Anbang before it was taken over by the Chinese government, has stepped up its sale of assets.

It is the latest effort by Beijing to dissolve the group following its credit-fuelled expansion, including the purchase of Waldorf Astoria in New York, that put the country’s financial system under stress and led to the arrest of its founder on fraud charges.

The conglomerate is looking to sell a 55 per cent stake in Chengdu Rural Commercial Bank, CRCB, one of its affiliated companies, for Rmb26.2bn ($3.76bn), according to a filing on Beijing Financial Assets Exchange.

The group is also seeking to offload shares in 11 rural banks for a combined Rmb85m.

Analysts said the sales were a milestone in Anbang’s asset disposal, a microcosm of China’s deleveraging campaign, as CRCB had played an instrumental role in the group’s rise to prominence.

“The golden days for private financial holding firms, which grow by runaway debt accumulation, are gone,” said Zhuang Bo, an analyst at TS Lombard, a consultancy.

A local state official in Chengdu said the city government was interested in taking over the lender through one of its investment vehicles.

“Government ownership will help CRCB operate in the public’s best interest,” said the official.

It remains a question whether Chengdu could win the deal as it comes with a heavy financial burden. At the end of 2018, a consortium led by the city government dropped a bid for 35 per cent of CRCB for Rmb16.8bn.

Anbang first bought a 35 per cent stake in CRCB for Rmb5bn in 2011, two years after the lender, then owned by Chengdu, began operation.

The group later increased its holdings to more than half through various subsidiaries even though Beijing banned a single party from owning more than 20 per cent of a bank.

Over the next few years, CRCB grew by leaps and bounds as its total assets surged 273 per cent from 2011 to 2017, making it China’s largest rural commercial bank and Anbang’s most valuable business unit.

CRCB saw a change in fortune in 2018 when Wu Xiaohui, Anbang’s chairman, was arrested for fraud and the China Banking and Insurance Regulatory Commission took over the group.

The regulator then kicked off a selling spree of Anbang’s portfolio groups, worth more than Rmb1.9tn at its peak, to curb risks. By July last year, Anbang had sold off, or was selling, more than Rmb1bn worth of assets, according to CBIRC.

CRCB scaled back along with its parent. The lender’s total assets have shrunk by more than a fifth since peaking out in 2017, according to its financial statement.

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