Shengjing Bank lent billions to shareholder Evergrande, then forced a sale to get paid

China Evergrande Group began buying into Shengjing Bank, a regional lender based in Shenyang, in 2016, spending HK$3.89 billion for an initial 5.59% stake as part of a wider expansion push. Its holding grew over several years to roughly 35%, making the property developer the bank's largest shareholder.

That relationship became a lending channel. Between 2020 and 2021, as Evergrande's own liquidity tightened, Shengjing Bank extended large loans to the developer and its subsidiaries, including credit secured against a pledged 30.99% stake in Xinjiang Guanghui Industry Investment Group held by an Evergrande unit. By late 2022, Shengjing Bank was owed 32.6 billion yuan ($4.48 billion) that Evergrande had failed to repay.

In September 2021, with Evergrande's broader crisis now public and the bank's exposure to a single distressed borrower threatening its own stability, Evergrande agreed to sell 19.93% of Shengjing Bank to Shenyang Shengjing Finance Investment Group, a Shenyang state-owned enterprise, for just under 10 billion yuan (about $1.5 billion). Evergrande's own filing stated the bank had demanded all net proceeds go toward settling the developer's debts to it — Evergrande received none of the money itself.

The sale cut Evergrande's stake to about 14.6%, and did not fully close the exposure: unpaid loans continued to surface afterward, including the pledged Xinjiang Guanghui shares Shengjing Bank sought court approval to seize in late 2022. A year after the first sale, an arbitration ruling over further unpaid loans forced a court auction of Evergrande's remaining 14% stake, bought by a consortium of seven Shenyang firms for 7.3 billion yuan.