(Yicai Global) June 13 -- Debt-ridden China Huarong Asset Management has agreed to sell its stake in Huarong Xiangjiang Bank, a regional commercial lender, to a group of local government investment firms for CNY12 billion (USD1.8 billion), as part of the state-owned financial giant’s restructuring.

Huarong will offload its 40.5 percent in the Hunan province-based bank to Hunan Chasing Financial Holding and Central Huijin Investment for CNY6.1 billion (USD910 million) and CNY5.9 billion, respectively, the Beijing-based seller said in a statement on June 9.

Huarong, one of China’s four largest state-owned asset managers, lost CNY102.9 billion in 2020, sending it into a financial crisis. It brought in five new shareholders last December, including Citic Group, before embarking on asset sales in an effort to switch back to its main business.

It set up Huarong Xiangjiang Bank in 2010 through the merger of a number of commercial banks in Hunan. At the end of last year, the bank had assets of CNY426 billion (USD63.2 billion), of which CNY392.9 billion were liabilities, and reported an annual net profit of CNY3.1 billion on revenue of CNY21.8 billion.

After the sale, Chasing Financial will own 40.5 percent, becoming the bank’s majority shareholder, while Central Huijin Investment will become the second largest with 20 percent.

Huarong sold its stake in Huarong Zhongguancun Distressed Asset Exchange and Huarong Consumer Finance last year. At a performance briefing in March, a Huarong executive said the sale of other units such as Huarong International Trust and Huarong Securities was in progress.

Huarong turned a profit last year, reporting a CNY378.5 million (USD56.2 million) gain, per its latest annual report. Revenue rose 23 percent to CNY93.1 billion, while the value of its assets fell 4.5 percent to CNY1.57 trillion (USD233 billion).

Editors: Dou Shicong, Futura Costaglione