Xiamen Bank's 419 Million Yuan Debt Recovery Case Enters Forced Execution, New Leader Hong Pipa Faces "First Test"

【Text / Yushan Guanjin Studio】

On March 5th, Xiamen Bank (601187.SH) received a “Notice of Case Acceptance” from the Xiamen Intermediate People’s Court, confirming that its application for compulsory enforcement against Yinxiang Oil, Yinxiang Group, and Dongfang Group has been officially filed. Thus, this 2023-originated loan dispute of 418.67 million yuan, after litigation, first and second trials, has finally reached the last stage of debt collection.

Behind this announcement is a complex credit story—In 2021, Dongfang Group fully acquired Yinxiang Group and Yinxiang Oil, then obtained a total of 880 million yuan in loans from Xiamen Bank through guarantees by the parent company and loans by subsidiaries. Nearly half of this, 419 million yuan, was part of this credit line.

More notably, when Xiamen Bank issued this loan, Dongfang Group was already deep in losses from the Beijing Qinglong Lake real estate project, which had been losing money for over ten years, with cumulative losses exceeding 7.3 billion yuan. The borrower, Yinxiang Oil (mainly engaged in edible vegetable oil processing and food wholesale), had a net asset of -170 million yuan and a net profit of -200 million yuan in 2022, the year before the loan was granted, already in a state of insolvency. The guarantor’s financial falsification and the borrower’s insolvency planted hidden risks from the start, and this initial misstep eventually evolved into a nearly three-year-long tug-of-war over debt recovery.

Screenshot from Xiamen Bank announcement

Three Years of Debt Collection: How a Credit Line Led to Forced Enforcement

The dispute began with a credit agreement in May 2023.

On May 16, 2023, Xiamen Bank provided Yinxiang Oil with a principal credit limit of 419.1 million yuan, and signed a guarantee contract with Yinxiang Group and Dongfang Group, stipulating that both companies would jointly guarantee the loan. On the surface, this “joint liability guarantee” arrangement formed an initial risk control system. However, collateral security was not arranged simultaneously—only on May 29, 2024, did Yinxiang Oil provide real estate collateral and legally register the mortgage.

It is known that Yinxiang Oil had been an important manufacturing loan client of Xiamen Bank for many years. By the end of 2017, 2019, and mid-2020, it ranked first among the bank’s top ten manufacturing loan clients. This long-term relationship may be one reason why the bank failed to maintain sufficient risk distance when issuing this loan. Meanwhile, just before the credit was granted, the borrower showed clear financial warning signs: in 2022, Yinxiang Oil’s net assets were -170 million yuan, net profit -200 million yuan, already insolvent; the rapeseed oil market was depressed, and the company’s operations were also flashing red.

The guarantor’s situation was equally concerning. On March 16, 2025, the CSRC issued a “Preliminary Notice of Administrative Penalty,” recognizing that Dongfang Group’s disclosed financial information from 2020 to 2023 was seriously false, involving major financial fraud. The notice showed that Dongfang Group had artificially inflated revenue by 16.129 billion yuan and operating costs by 16.074 billion yuan over four years, with annual false increases: 3.897 billion yuan in 2020, 4.865 billion yuan in 2021, 6.543 billion yuan in 2022, and 825 million yuan in 2023. This meant that when Xiamen Bank reviewed the guarantor’s qualifications in 2023, it faced severely distorted financial statements—Dongfang Group’s actual controllers Zhang Hongwei and Chairman Sun Mingtao were fined 10 million and 5 million yuan respectively, and both were permanently banned from securities markets. As a guarantor, Dongfang Group was unable to bear joint liability and was already in a state of financial collapse.

External market factors and tight operational funds led Dongfang Yinxiang Oil to phase out production in the second half of 2024, completely losing its debt repayment capacity. Subsequently, Xiamen Bank announced early repayment of the loan and filed a lawsuit with the Xiamen Intermediate People’s Court. On September 29, 2025, the court issued a first-instance judgment supporting all of Xiamen Bank’s claims: requiring Yinxiang Oil to repay two loans totaling 418.6765 million yuan plus interest and penalties; the bank has priority rights to the collateral; Yinxiang Group and Dongfang Group are jointly liable for all debts; the case acceptance fee of 2.1967 million yuan is to be borne jointly by the three defendants.

However, the favorable judgment did not lead to smooth debt recovery. Dissatisfied with the first-instance ruling, Yinxiang Oil appealed to the Fujian Higher People’s Court. On January 30, 2026, the court dismissed the appeal and upheld the original verdict. The three defendants still failed to fulfill their obligations after the judgment took effect, forcing Xiamen Bank to formally apply for enforcement in March 2026. From the credit issuance in May 2023 to enforcement filing in March 2026, after two trials, nearly three years have passed, and the case remains unresolved.

Screenshot from Xiamen Bank announcement

Challenges in Xiamen Bank’s Credit Risk Control

This incident is not an isolated mistake but a concentrated reflection of long-standing issues in Xiamen Bank’s credit risk management system.

The bank has suffered setbacks with real estate developers such as Evergrande, Sunshine City, and Sansheng Properties, carrying heavy historical burdens. By the end of 2025, although the overall non-performing loan ratio was controlled at a relatively low 0.8%, resolving existing risks during industry adjustment cycles still requires time.

In the Yinxiang Oil case, problems were already embedded during the pre-loan investigation phase. Key risk signals—insolvency of the borrower and financial falsification by the guarantor—should have triggered loan rejection but were not effectively identified or intercepted during approval. Even acknowledging the concealment of financial fraud, the ongoing losses and negative net assets could have been verified through routine due diligence, indicating deficiencies or superficiality in this critical step.

The fragility of the guarantee chain is another systemic risk source. In this case, the parent company Yinxiang Group provided guarantees for its subsidiary Yinxiang Oil, with highly intertwined operations—damage to one affects the other, essentially a repeated risk exposure. The inclusion of Dongfang Group, a listed company, as a guarantor appeared to enhance creditworthiness externally, but its true financial condition was severely overestimated due to false disclosures. In September 2025, the Xiamen Intermediate Court supported the bank’s claims, requiring Yinxiang Oil to repay the 419 million yuan loan and related interest, with Yinxiang Group and Dongfang Group bearing joint and several liabilities. This “superficially tight but substantively hollow” guarantee structure is not uncommon among small and medium-sized banks’ credit practices. The core issue lies in the bank’s superficial assessment of the guarantor’s repayment capacity, overly relying on external reputation and past credit, neglecting the guarantor’s dynamic financial health.

Xiamen Bank’s own structural pressures also objectively increased risk exposure. In 2025, the bank’s performance improved significantly, with operating income of 5.856 billion yuan (+1.69%) and net profit of 2.75 billion yuan (+1.64%), reversing previous negative growth. However, the net interest margin at the end of Q3 2025 was only 1.04%, still relatively low among listed city commercial banks, with profit margins significantly compressed.

Screenshot from Xiamen Bank’s earnings forecast

Meanwhile, its loan-to-deposit ratio has continued to rise, reaching 96.31% at the end of Q3 2025. Under pressure on net interest margins, the bank’s motivation to expand credit scale to maintain profit growth has objectively increased. This “volume over price” strategy often raises risk appetite—aiming to cover funding costs and achieve profit targets, the bank may accept previously avoided “marginal clients” or turn a blind eye during credit review, which is the internal driver behind the approval of high-risk projects like Yinxiang Oil.

In this context, Xiamen Bank disclosed for the first time in its 2024 annual report that it had initiated performance-based recovery efforts: 188 personnel were subject to performance recovery totaling 3.7012 million yuan, and 6.022 million yuan of deferred risk payments were temporarily withheld. In August 2025, the supervisory board reviewed the “2024 Performance-Based Recovery Report,” indicating this mechanism is ongoing. However, the recovery amount is still far from the scale of billions of yuan in unresolved lawsuits, and its deterrent effect remains to be seen. This reveals a deep contradiction: the short-term performance impulses of front-line staff versus the long-term risk culture of the bank still face significant tension.

At the industry level, this dilemma is not unique to Xiamen Bank. Under the macro trend of narrowing net interest margins, many small and medium-sized city and rural commercial banks face shrinking profit margins. Some banks find it difficult to fully detach from scale pressures in credit decision-making, with pre-loan investigation depth and independence constrained by reality. Meanwhile, as some enterprises commit financial fraud to fake solvency, the authenticity of financial statements—relied upon in traditional “three checks”—becomes a risk itself. The reliance on paper-based review methods urgently needs to upgrade to digital, multi-dimensional, dynamic monitoring.

For Xiamen Bank, the immediate priorities are stopping losses and repairing trust. The current chairman, Hong Pipa, from Industrial Bank, faces a challenging situation with ongoing lawsuits, declining profits, and the need to rebuild its credit risk management system and market confidence. With traditional business growth slowing, whether the bank can successfully recover the debt will directly test the new management’s risk disposal capabilities.