(Yicai Global) Oct. 28 -- Zhongyuan Bank’s shares jumped after the lender unveiled a plan to merge with three other local banks, forging an entity with assets in excess of CNY1 trillion (USD156.3 billion), as part of reforms in China’s financial sector to create stronger regional banks.

Zhongyuan Bank [HKG:1216] finished 8.1 percent higher today at HKD1.07 (14 US cents), after earlier soaring by as much as 11 percent.

The other three lenders are Bank of Luoyang, Bank of Pingdingshan and Bank of China Travel Services Jiaozuo, Henan province-based Zhongyuan Bank said in a statement released late yesterday.

Among Chinese mainland-listed city banks, only six -- including Bank of Beijing, Bank of Shanghai and Bank of Jiangsu -- had assets of more than CNY1 trillion at the end of June.

Since last year, provincial-level city lenders have been created through mergers in various provinces, including Sichuan and Shanxi, as regulators focus on promoting the consolidation of small and medium-sized banks to mitigate risks.

Bank of Luoyang is one of the main creditors of indebted property developer China Evergrande Group, but the bank has not revealed the scale of its exposure.

The proposed merger will boost Zhongyuan Bank’s ability to help Henan’s economic and social development, it said, without providing any further details.

Zhongyuan was itself formed by the merger of 13 city banks in Henan in 2014. It had assets of CNY753 billion (USD117.7 billion) at of the end of June, while Bank of Luoyang and Bank of Pingdingshan had CNY303.4 billion and CNY117.8 billion, respectively.

Editor: Tom Litting