Suzhou Bank About to IPO, Has Two Defaulted Trust Products

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Sogou: Suzhou Bank Draws Attention to Risks in Two Trust Plan Investment Default Rating Reports
Financial Association (Beijing, Reporter Li May)-Soochow Bank (002966.SZ), which is about to list on A shares, will face certain pressure of development and risk control in its trust and asset management plan in the future.

"Some investments have defaulted, and the future recovery of funds has yet to be continuously observed." On July 16, Joint Credit released a rating report on Suzhou Bank, saying that as financial supervision becomes stricter, attention should be paid to future related risks and the potential impact on liquidity formation.

The above rating report shows that by the end of 2018, Suzhou bank had defaulted on two trust plan investments. the underlying assets were trust loans, namely, 300 million yuan trust loans to Nanjing yurun food co., ltd. and trust loans to Wuxi bosheng asset management co., ltd., with a book balance of 131 million yuan.

Among them, the first trust loan guarantee is guaranteed by the group and the actual controller. At present, this investment has been classified into suspicious categories according to the five levels, and impairment reserves have been accrued according to the proportion of 50%. The second trust loan is guaranteed by the actual controller and his spouse's full joint and several liability guarantee and the commercial real estate collateral guarantee located in Wuxi. At present, this investment has been classified into sub-categories according to the five levels, and impairment reserve is accrued according to the proportion of 25%.

In fact, under the background of strict financial supervision, Suzhou Bank has appropriately controlled the proportion of investment assets (bond investment, trust plan and asset management plan investment, wealth management product investment, etc.) in total assets and adjusted the structure of investment assets in 2018. At the same time, the provision for impairment of receivables investment has been increased. As of the end of 2018, the total investment assets amounted to 98.255 billion yuan, and the balance of impairment provision for receivables investment and available-for-sale financial assets totaled 635 million yuan.

Data show that by the end of 2018, the balance of Suzhou Bank's bond investment, trust plan and asset management plan investment and wealth management product investment were 38.142 billion yuan, 33.014 billion yuan and 15.788 billion yuan respectively. The balance of the first two and the proportion of assets under investment both declined.

It is understood that Suzhou Bank Trust Plan and Asset Management Plan are mainly invested in government financing platforms and state-owned enterprises focusing on infrastructure construction. The regions are concentrated in the locations of Suzhou Bank branches. Counterparties include trust companies, asset management companies, securities companies and fund companies. The average investment period is about two years.

"Suzhou Bank has incorporated trust plan and asset management plan investments into the bank-wide unified credit granting, and the authorization and approval refer to the credit approval process," said the above rating report. It also implements "list system" access classification management, conducts "penetration" analysis on the invested assets according to the principle of "substance over form", and fully sets aside asset impairment reserves for the risky investment assets according to the standard.

However, the rating report also reminds that the trust plan and asset management plan of Suzhou Bank are still relatively large in scale. As the regulatory requirements for interbank financial management and non-standard investment are stricter, Suzhou Bank will face certain pressure in the future development of such businesses.

As of the end of the first quarter, Suzhou Bank had total assets of 315.211 billion yuan and total liabilities of 291.521 billion yuan. In 2018, Suzhou Bank realized operating income and net profit of 7.737 billion yuan and 2.314 billion yuan respectively, up 12.15% and 7.64% year on year. The NPL ratio and provision coverage rate were 1.68% and 174.33% respectively.

The latest announcement of Suzhou Bank shows that it will hold an online roadshow on July 17 and purchase on July 18, with no more than 333 million shares to be publicly issued. "After the A-share listing is completed, Suzhou Bank's capital replenishment channels are expected to be further expanded and its capital strength will be enhanced," the rating report said. Suzhou Bank's main long-term credit and financial bond credit ratings are AAA, and the outlook is stable.

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