The auction market frequently cools down, and the equity of unlisted banks needs to be revalued.

Financial Times Reporter Xie Zhongxiang

Recently, multiple large bank equity auctions have been repeatedly sold at discounts but still remain unsold.

The Securities Times reporter observed on the Alibaba Judicial Auction Platform that several banks, including Guangdong Huaxing Bank, have once again listed multiple equity stakes worth over one billion yuan. However, after multiple failed auctions, they have entered into a resale process.

In the face of the sluggish market for non-listed bank equity auctions, some targets’ trustees are attempting to attract buyers with low-price promotions. For example, the Alibaba Judicial Auction Platform listed 100,000 shares of Beijing Rural Commercial Bank with a starting bid of only 188 yuan, despite the bank’s latest net asset value being as high as 837,000 yuan.

Multiple Equity Auctions Fail to Sell

Recently, Jiangxi Baosheng Industrial Co., Ltd. (referred to as “Jiangxi Baosheng”) publicly listed 23.652 million shares of Jiujang Bank, which had previously failed to sell in multiple auctions and has now entered resale. The resale price is approximately 193 million yuan, about 8.18 yuan per share, which is roughly four times the bank’s latest H-share closing price of 1.81 Hong Kong dollars per share.

In October last year, Jiangxi Baosheng’s holdings of these shares were publicly listed again, with an initial auction reserve price of 241.8 million yuan, but no bidders participated. The second round lowered the reserve to 193 million yuan, yet no buyers emerged, resulting in a failed auction. As early as July to August 2021, several of Jiangxi Baosheng’s holdings of Jiujang Bank (with a combined reserve exceeding 100 million yuan) were forcibly auctioned by courts but failed, and the auction was subsequently withdrawn after the second attempt.

Besides Jiujang Bank, other assets that have undergone multiple auctions include several equity stakes held by Shanghai Shenglong Investment Group in Guangdong Huaxing Bank. In February this year, a batch of 90 million shares also ended without bids, and has recently been relisted.

In fact, among judicial auctions of small and medium-sized banks’ equity, failed sales are quite common. In January this year, the approximately 416 million shares of Shanxi Bank held by Zhongrong Xinda Group Co., Ltd. were listed with a reserve price of 417 million yuan but failed to sell. In February, 30.6 million shares of Langfang Bank held by Tianjin Runsheng Plastic Products Co., Ltd. were discounted to 74.63 million yuan but still did not sell in the second auction phase.

“188 Yuan for 100,000 Shares”

Similarly, due to low overall market transaction volume, some trustees of bank equity assets are trying to attract buyers with “low-price traffic” strategies.

The Securities Times reporter saw on the Alibaba Asset Auction Platform that several shares of Beijing Rural Commercial Bank are either being auctioned or about to be. One batch of 100,000 shares has a starting bid of only 188 yuan. However, the deposit for this auction is 20,000 yuan, with a minimum increment of 2,000 yuan. An official involved explained to the media that setting the starting bid at 188 yuan is to attract participants, and the final transaction price will definitely be higher.

As of March 8, this auction had 21 registered participants, nearly 750 set reminders, and attracted over 4,700 views. On March 5, another auction of 100,000 shares of Beijing Rural Commercial Bank with a reserve price of 1,888 yuan was successfully sold for 388,800 yuan after 70 bids.

The auction notice shows that as of the end of September 2025, Beijing Rural Commercial Bank’s net asset value per share was 8.37 yuan. Compared to 2024, the value of the bank’s equity has increased, with the year-end net asset per share at 7.49 yuan. According to the bank’s dividend payout data from June last year, the bank paid a cash dividend of 0.14 yuan per share (tax included). For 100,000 shares, that amounts to 1,400 yuan in pre-tax income just from dividends last year.

Liquidity Challenges for Non-Listed Bank Equity

Looking at small and medium-sized banks with frequent equity auctions, it’s clear that non-listed banks face poor liquidity in the auction market, making transactions difficult.

For example, according to incomplete statistics from the Alibaba Judicial Auction Platform, by the end of 2025, there have been 2,700 bank equity auction cases, with 650 resulting in successful sales, while the remaining 2,050 cases failed due to no bids.

This means that over 75% of bank equity listings on the platform in 2025 failed to complete transactions, a significant increase compared to previous years. Geographically, the success rate varies—regions with developed economies like the Pearl River Delta and Yangtze River Delta perform better than central and western China, North China, and Northeast China.

According to data from the National Financial Regulatory Administration, by the end of 2025, the net interest margin of Chinese commercial banks further narrowed to 1.42%, down 10 basis points from the end of Q4 2024. Non-performing loan ratios remained steady at 1.50%. Among different bank types, city commercial banks saw a relatively higher increase in non-performing loans, rising by 0.06 percentage points.

Sun Binbin’s team at CICC Securities analysts pointed out that small and medium-sized banks primarily face risks related to internal control compliance and illegal operations, and there may also be risks involving shareholders and actual controllers within their equity structures. Additionally, during economic recovery, the transition of new and old growth drivers increases operational risks for these banks. Meanwhile, in a low-interest-rate environment, narrowing interest margins reduce profitability, impacting capital adequacy and repayment capacity.

“In the short term, the market for small and medium-sized bank equity auctions will continue to be sluggish, likely characterized by ‘deepening discounts and shrinking transactions,’” said Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance. He believes that the “winter” faced by small and medium-sized bank equity auctions is a result of the risks accumulated during their past extensive growth model. The key to breaking this deadlock is not waiting for market recovery but through substantive risk clearing, governance restructuring, and mechanism innovation to restore investment value in small and medium-sized bank equities.