On one side, public funds and insurance institutions continue to increase their holdings in listed bank stocks, making banking equities one of the most sought-after assets in capital markets. On the other side, non-listed banks face repeated auction failures for equity stakes worth hundreds of millions of yuan, despite multiple rounds of price cuts.

Recent observations show that several banks including BANKOFJIUJIANG, China Guangfa Bank, and Guangdong Huaxing Bank have listed equity stakes valued at over 100 million yuan on Alibaba's judicial auction platform. Just days ago, Langfang Bank's massive equity stake with a reserve price of 413 million yuan failed to attract any bidders in its second auction round. Analysts point out that non-listed bank equity generally suffers from poor liquidity, while some small and medium-sized banks face internal control compliance and operational issues, leading to significantly lowered return expectations among potential investors.

**BANKOFJIUJIANG's Large Equity Stake Opens at 370 Million Yuan**

According to Alibaba's judicial platform, Jiangxi Baoshen Industrial Co., Ltd. is offering 24.84 million domestic shares of BANKOFJIUJIANG for public auction, scheduled to begin on August 21. The auction information shows the first-round reserve price at approximately 372.6 million yuan, or 15 yuan per share, representing a premium of about 374.7% compared to the bank's H-share closing price of HK$3.45 per share (approximately 3.16 yuan) on August 12.

BANKOFJIUJIANG's financial reports show that as of the end of 2024, Jiangxi Baoshen ranked among the bank's top ten shareholders, holding approximately 84.8 million domestic shares, representing 2.98% of total share capital and making it the seventh-largest shareholder. The shares being auctioned represent about 29.2% of Jiangxi Baoshen's total holdings in BANKOFJIUJIANG.

The executing court, Yantai Intermediate People's Court in Shandong Province, emphasized that the equity stakes involved are Hong Kong-listed domestic shares, representing mainland China-based equity held by pre-listing mainland shareholders, settled in renminbi but unable to trade on the Hong Kong Stock Exchange. These shares can only be transferred among Chinese legal entities or individuals, qualified foreign institutional investors, or strategic investors, classifying them as restricted circulation shares.

This is not the first time Jiangxi Baoshen's BANKOFJIUJIANG shares have faced judicial auction. Between July and August 2021, several equity stakes (with combined reserve prices exceeding 100 million yuan) failed in court-mandated auctions and were subsequently withdrawn during second-round auction processes. Previously, multiple shareholders have faced judicial auctions. In 2019, the bank's then fourth-largest shareholder, Dasheng (Fujian) Agriculture Co., Ltd., attempted to auction 121 million BANKOFJIUJIANG shares with a starting price of approximately 1.13 billion yuan, which ended in failure.

As a Hong Kong-listed bank, BANKOFJIUJIANG's H-shares have recorded one of the largest year-to-date declines among Hong Kong-listed Chinese banks. As of August 12's close, BANKOFJIUJIANG had fallen over 33% year-to-date. Most other Hong Kong-listed banks have posted gains, with Huishang Bank and Bank of Qingdao recording cumulative increases exceeding 50%.

Regarding financial performance, in Q1 2025, BANKOFJIUJIANG achieved operating revenue of 2.606 billion yuan and net profit of 380 million yuan, representing year-over-year declines of approximately 8% and 52%, respectively. Financial reports also show the bank's non-performing loan ratio has risen for three consecutive years. As of end-2024, the NPL ratio reached 2.19%, up 0.38 percentage points from 1.82% at end-2022, while provision coverage ratio declined from 173.01% to 154.25% over the same period.

**Multiple Billion-Yuan Equity Auctions Approaching**

August will witness several more bank equity auctions worth over 100 million yuan, including China Guangfa Bank and Guangdong Huaxing Bank.

According to Alibaba's auction information, on August 19, Xiamen Hengxing Huizhi Technology Co., Ltd. will auction 19 million shares of China Guangfa Bank with a starting price of 154 million yuan. Public information shows the equity holder, Xiamen Hengxing Huizhi Technology, has declared bankruptcy. Previously on July 22, this equity stake's first auction started at 171 million yuan but failed due to no bidders. Additionally, another 2.4 million registered shares of China Guangfa Bank held by Xiamen Hengxing have also failed at auction. This equity stake has undergone 9 listing and failure cycles, with each successive listing featuring a discounted starting price.

Beyond China Guangfa Bank, multiple small and medium-sized banks have listed equity stakes on judicial auction platforms this year, with many offered at discounted prices.

Recently, 90 million shares of Guangdong Huaxing Bank will enter public auction on August 28, with an assessed value of 171 million yuan and a starting price of 119.7 million yuan, representing a 30% discount from the assessed value.

This equity stake belongs to Shanghai Shenglong Investment Group Co., Ltd. According to Huaxing Bank's 2024 financial report, Shanghai Shenglong holds approximately 1 billion shares, representing 12.50% ownership and ranking as the second-largest shareholder. Notably, according to China's enforcement information disclosure website, Shanghai Shenglong was listed as a judgment debtor by courts in June 2024, with 28 enforcement records. This means the current Huaxing Bank equity auction falls under judicial enforcement.

Among small and medium-sized banks in judicial auctions, failed auctions are common. On August 6, Langfang Bank's 167 million shares entered a second auction round, again receiving no bids and failing. Previously, this Langfang Bank equity stake was offered at a 20% discount from assessed value in July, with a first-round starting price of 486 million yuan, which failed. The second round at approximately 413 million yuan also attracted no buyers.

**Non-Listed Bank Equity Faces Liquidity Challenges**

This year, listed banks have again entered a bull run, with nearly 70% of A-share listed banks posting cumulative gains exceeding 10%, while H-share bank stocks generally outperformed their A-share counterparts. Conversely, for small and medium-sized banks frequently facing equity auctions, non-listed bank equity suffers from poor liquidity in auction markets, making successful transactions difficult.

Among small and medium-sized bank equity stakes subject to forced auction on judicial platforms, what percentage ultimately complete transactions? Taking Alibaba's auction platform as an example, incomplete statistics show that as of August 11, 1,377 bank equity auctions concluded year-to-date, with only 380 resulting in successful transactions, while the remaining 997 failed due to no bidders.

This means over 70% of bank equity judicial auctions fail to complete transactions, a notably higher proportion than previous years. Geographically, successful transactions show a "southern hot, northern cold" pattern, with economically developed regions like the Pearl River Delta and Yangtze River Delta performing better than small and medium-sized banks in central-western, northern, and northeastern regions.

According to data from the National Financial Regulatory Administration, China's commercial banks' net interest margin further narrowed to 1.43% in Q1 this year, down 9 basis points from end-Q4 last year, while the non-performing loan ratio increased by 0.01 percentage points to 1.51%. By institution type, private banks and rural commercial banks showed relatively higher NPL ratio increases of 0.1 and 0.06 percentage points, respectively.

Facing operational risks at small and medium-sized banks, Caijing Securities analyst Sun Binbin's team previously noted in research reports that small and medium-sized banks primarily face risks from internal control compliance and irregular operations, potentially including shareholder and actual controller risks within equity structures. Additionally, during economic recovery and new-old growth driver transitions, small and medium-sized banks face elevated business expansion risks. Simultaneously, in the low interest rate environment, narrowing spreads lead to declining profitability, affecting capital adequacy ratios and solvency.