(Yicai) Jan. 29 -- Liaoning Financial Holding Group, owned by the finance authority of China's Liaoning province, has made a tender offer to buy all of troubled Bank of Jinzhou for as much as CNY7.6 billion (USD1.1 billion) in cash.

Liaoning Financial has offered HKD1.38 (18 US cents) for each of the bank’s Hong Kong-listed shares and CNY1.25 (18 US cents) for each yuan-denominated share issued to Chinese mainland investors, Bank of Jinzhou said on Jan. 26. It recommended shareholders accept the offer, saying gives shareholders a good opportunity to cash out at a favorable premium.

If the offer is accepted, Liaoning Financial will pay around HKD4.9 billion (USD627 million) for the so-called H-shares and about CNY3.2 billion (USD445.5 million) for the rest. It already owns a 6.7 percent stake in Bank of Jinzhou.

Bank of Jinzhou’s stock [HKG: 0416] has slid since the exposure of risks in 2019, hitting a record low of 42 Hong Kong cents (5 US cents) in November 2022, it said. Due to operational risks, trading in its Hong Kong shares has been halted for just over a year due to operational risks.

After the transaction, the bank will delist from the Hong Kong Stock Exchange, becoming the first Chinese mainland lender to do so. The listing no longer provides a practical and viable financing channel for the bank, it said. The lender may also lose its listing status due to its prolonged difficulty producing financial reports, it added.

Bank of Jinzhou was created from the merger of several urban credit unions. Its had assets of CNY826.6 billion (USD115.1 billion) as of June 30, 2022, ranking second among city commercial banks in Liaoning province.

After Bank of Jinzhou ran into operational issues in 2019, Industrial and Commercial Bank of China collaborated with China Great Wall Asset Management and China Cinda Asset Management, two of the country's major bad loan managers, to acquire controlling stakes in the troubled lender via equity transfer, appointing new executives to drive its business restructuring.

After several rounds of asset restructuring, Beijing Chengfang Huida Enterprise Management, a unit of the People's Bank of China, was the sole major shareholder of Bank of Jinzhou as of the end of June 2022, with a 38 percent stake.

Editors: Tang Shihua, Martin Kadiev