After multiple failed attempts to find a new buyer, the equity of Huishang Bank, affiliated with the Zhongjing group, is approaching its final trading moment.

Text/ Paper Silent

March 25, 2026, Gao Yang, Chairman of Zhongjing Industrial Group, stated in an exclusive interview with Cailian Press that the company is currently in its “most difficult stage” since its founding, and is in intensive negotiations to sell all its shares in Huishang Bank, viewing this as the “ultimate solution” to resolve approximately 8 billion yuan of debt pressure.

Previously, Zhongjing’s proposal for interim dividends from Huishang Bank was overwhelmingly rejected, and its determination to dispose of core assets has now been fully implemented. This nearly twenty-year-long equity dispute, which began in 2007, has experienced joint investments, increased holdings, public internal conflicts, and broken deals, finally reaching a critical point of liquidation. Behind this are Zhongjing’s debt troubles, Huishang Bank’s governance issues, and the利益 game among multiple capital parties.

Zhongjing’s “final deal” is approaching. Image source: Securities Times

Zhongjing joins hands with Shanshan to layout Huishang Bank’s equity

The relationship between Zhongjing and Huishang Bank began with a joint layout in 2007. At that time, Zhongjing, led by Gao Yang, partnered with Shanshan Group under Zheng Yonggang, jointly investing through Zhongjing Sihai Industrial to acquire 141 million shares of Huishang Bank, becoming an early major shareholder. At that time, there was no rivalry; instead, the two sides showed tacit cooperation in increasing their holdings, trying to share the dividends of city commercial banks’ development.

In 2008, Huishang Bank launched a capital increase of 5 billion shares, which caused controversy because the pricing was far below market value and the state-owned shareholding ratio was high. Zhongjing initially planned to become the largest shareholder through this, but ultimately only acquired 300 million shares via a private placement, while Zhongjing Sihai was allocated shares at 1.35 yuan/share, far below the auction price of 5.05 yuan/share at that time, which was once criticized for causing state asset loss.

Although Zhongjing did not succeed in becoming the top shareholder, its pace of increasing holdings did not stop. In 2011, through Xiuning Xinhua Asset Management (later renamed Zhongjing Xinhua), it transferred 200 million shares of Huishang Bank held by Chery Automobile Sales Company at market price; in 2013, after Huishang Bank was listed on the Hong Kong Stock Exchange, Zhongjing’s offshore platform Wealth Honest continued to increase holdings in the secondary market, gradually expanding its shareholding scale.

In September 2015, Zhongjing completed its final round of increasing holdings, officially surpassing Anhui Energy Group to become Huishang Bank’s largest shareholder. However, this top position brought new problems—due to the high shareholding ratio, the public float of Huishang Bank’s H-shares dropped to 24.78%, below the 25% minimum requirement of the Hong Kong Stock Exchange. Subsequently, Zhongjing’s continued increases further reduced the public float to less than 16%, planting hidden dangers for future conflicts with bank management.

Since 2009, Gao Yang has served as a non-executive director of Huishang Bank, deeply involved in its corporate governance. This role has become an important link for Zhongjing’s influence over Huishang Bank’s decisions. As of the end of the first half of 2025, Zhongjing held a total of 10.59% of Huishang Bank’s shares through Zhongjing Xinhua, Wealth Honest, and other platforms. Although diluted to the second-largest shareholder after Huishang Bank’s 2021 rights issue, it remains one of the most influential shareholders, second only to the Deposit Insurance Fund with 11.22%.

As of the end of the first half of 2025, Zhongjing held a total of 10.59% of Huishang Bank’s shares through Zhongjing Xinhua, Wealth Honest, and other platforms. Image source: Huishang Bank 2024 interim report

Dividends and internal conflicts over ten years eroded mutual trust

The core of the conflict between Zhongjing and Huishang Bank has always revolved around profit distribution, with this dividend dispute lasting nearly a decade without resolution. Zhongjing’s insistence on dividends stems from the fact that most of its funds for holding Huishang shares come from financing, and dividend payments are a key way to cover interest and ease capital pressure. Shanshan Holdings also pointed out in subsequent announcements that the financing costs for Zhongjing Xinhua’s acquisition of Huishang shares had long exceeded what dividends could cover.

In 2016, Huishang Bank planned to review a proposal for a private placement of overseas non-public preferred shares at the shareholders’ meeting. Zhongjing Sihai immediately submitted a temporary proposal to terminate the preferred share issuance, advocating for a non-public issuance of H-shares to solve the issue of insufficient public float, while maintaining about 30% dividend payout ratio. The preferred share plan was approved, but Zhongjing’s proposal was rejected, and the disagreement was publicly exposed for the first time.

In 2017, conflicts escalated further. Huishang Bank proposed to sharply cut the 2016 dividend payout ratio by 62%, and also applied to suspend A-share IPO review citing matters for negotiation and changes in auditing firms. Zhongjing clearly opposed, believing the bank could adjust operations or issue H-shares to raise capital without reducing shareholder returns. The board’s proposal was ultimately approved. In June 2017, Gao Yang publicly criticized Huishang Bank’s corporate governance as chaotic, alleging internal control issues and denying that Zhongjing was responsible for the IPO suspension. The confrontation between the two sides was fully exposed.

Since then, the dividend dispute has intensified. In June 2024, Zhongjing proposed more aggressive measures, demanding to raise the 2023 dividend ratio from 15% to 30%, and to make up the dividend shortfall from 2016 to 2022 at 30%. The total amount involved exceeded 10 billion yuan, forcing Huishang Bank’s shareholders’ meeting to be postponed. The proposal was ultimately rejected with about 17.5% approval. In January 2026, Zhongjing submitted a mid-term dividend proposal, planning to pay 1.87 yuan per 10 shares, totaling 1.88B yuan, representing 30.06% of net profit. However, at the temporary shareholders’ meeting in February, this proposal was the only one rejected, with opposition votes at 50.45%, and approval only 25.55%.

Besides dividend disagreements, Zhongjing and Huishang Bank’s management also clashed over A-share listing, personnel appointments, financing plans, and other major operational issues. In 2015, Huishang Bank planned an A+H share listing, but Gao Yang refused to sign the IPO application documents, causing the plan to stall. In late 2017, the then CEO Li Hongming resigned, and management underwent large-scale restructuring, but disagreements over profit distribution remained unresolved. These ongoing internal conflicts not only delayed Huishang Bank’s A-share listing but also gradually made Zhongjing consider retreating.

Repeated attempts to find a buyer have repeatedly failed

In 2019, Zhongjing officially decided to liquidate its Huishang Bank shares to ease financial pressure, initiating a long-term process of asset disposal. In August of that year, Zhongjing Xinhua and Shanshan Holdings signed a framework agreement to transfer 14.32% of Huishang Bank shares for a total of 12.15 billion yuan, based on 1.5 times the net asset value as of June 30, 2018. The price was close to three times the H-share price at that time. The transfer included Zhongjing Xinhua’s direct holdings of domestic and H-shares, as well as 51.65% of Zhongjing Sihai’s equity. The buyer was required to pay the full amount before November 15, 2019.

After signing, Shanshan Holdings paid Zhongjing Xinhua 3.89 billion yuan for the transfer, but Zhongjing Xinhua only transferred 957M yuan worth of its 51.65% stake in Zhongjing Sihai to Shanshan Group.

In June 2020, the cooperation between the two sides broke down completely. Zhongjing Xinhua accused Shanshan Holdings of failing to pay the full amount on time, constituting a breach of contract; Shanshan countered that Zhongjing Xinhua deliberately delayed submitting transfer documents during the transfer of domestic shares, setting obstacles in approval and transfer processes, thus violating the agreement. Both parties subsequently filed lawsuits, and the cases are still ongoing. The deal ultimately collapsed, with the involved shares frozen by judicial authorities, becoming a major obstacle to Zhongjing’s asset disposal.

Shanghai Fengxian Jiangshan Road 5550, Shanshan Technology. Image source: Investor Network

After the failure of the Shanshan deal, Zhongjing did not stop seeking other buyers. In July 2021, Zhongjing Xinhua reached an intent to transfer shares with Hong Kong-listed Dongjian International, which mainly engaged in direct investment, private equity fund management, and wine sales. However, Dongjian’s past record showed no experience in bank asset acquisitions, and its total assets at that time were only 1.98B HKD with a net loss of nearly 20 million HKD. The deal ultimately did not materialize due to structural issues.

In November 2021, Zhongjing signed a formal agreement with Zhengwei Group to transfer about 19.77% of Huishang Bank shares at 8.09 yuan per share, totaling 16 billion yuan, with a premium of 316% over Huishang’s H-share price at that time. Gao Yang explained that the increase in the transaction price was mainly due to the rise in Huishang Bank’s net asset per share. However, this seemingly smooth deal also fell through because Zhengwei Group itself fell into a debt crisis. At that time, Zhengwei was overwhelmed by huge debts, its actual controller Wang Wenyin was restricted from high consumption, and many assets were seized and auctioned, making it impossible to complete the billion-yuan deal.

Meanwhile, the shares of Huishang Bank held by Zhongjing also fell into a state of disinterest. Since 2023, several central and state-owned enterprises such as COFCO Group and Ma Steel Group have repeatedly listed for sale their holdings of Huishang Bank shares. Despite lowering prices repeatedly, they faced repeated failed auctions. Shares listed on JD.com and Alibaba auction platforms also saw no bidders, and liquidity of these shares continued to deteriorate, making asset disposal even more difficult for Zhongjing.

Debt explosion, liquidation may be the only way out

Repeated failed transactions have caused Zhongjing’s financial pressure to explode, and the debt crisis fully emerged in 2024. On August 30, 2024, Zhongjing’s core platform Zhongjing Xinhua disclosed in its mid-term report that the 900 million yuan “16 Zhongjing 02” bonds issued in 2016 defaulted on August 26 after a two-year extension. This bond had joint guarantees from the major shareholder and Gao Yang’s personal guarantee in 2020 and 2022, but ultimately defaulted due to the guarantors’ non-performance, triggering Zhongjing’s debt crisis.

As of March 2026, Zhongjing’s total liabilities are about 8 billion yuan, with over 6 billion yuan overdue. The largest is the 3.89 billion yuan judgment debt from the equity dispute with Shanshan, plus 500 million yuan owed to Shanghai Life Insurance and other current liabilities. The capital chain is nearly exhausted.

Zhongjing Xinhua’s financial structure highlights the severity of this crisis. As of mid-2024, its total assets were 8B yuan, with long-term equity investments in Huishang Bank worth 18.79B yuan, accounting for 73.66% of total assets—almost all assets are tied to Huishang Bank’s shares. Its cash and equivalents were only 13.84B yuan, short-term loans 54M yuan, and non-current liabilities due within one year 811M yuan, with a significant liquidity gap.

Adding to the difficulty, in August 2023, Gao Yang was taken into custody for involvement in the case of Xu Heyi, former chairman of BAIC Group, further increasing uncertainty for Zhongjing. Although Gao Yang recently returned to media interviews, whether other risks remain is still uncertain.

Third-party rating agency BonD pointed out that Zhongjing Xinhua’s restricted assets are huge, reaching 2.06B yuan at the end of 2023, accounting for over 70% of total assets, mainly due to the restricted disposal of Huishang Bank’s H-shares. Its liquid assets are minimal, and other receivables have poor realizability, with limited short-term liquidity improvement potential.

Zhongjing Xinhua also admitted in its report that the funds available for debt repayment can only come from the overall sale of Huishang Bank’s shares. It does not rule out introducing strategic investors or disposing of non-core assets, but the cash flow from such measures can only sustain daily operations and cannot cover all interest-bearing liabilities.

Window opens, but challenges remain

Despite the difficulties ahead, Zhongjing’s share sale window is gradually opening. As of the close on March 25, 2026, Huishang Bank’s Hong Kong stock price was 4.37 HKD/share, more than doubling since the second half of 2024, approaching a historical high. On March 9, 2026, it was included in the Stock Connect program, significantly increasing the investor base and liquidity, creating favorable conditions for asset disposal. Fundamentally, Huishang Bank’s 2025 total assets exceeded 2.3 trillion yuan, up 15.5% year-on-year, with a net profit of 16.93 billion yuan, up 6.3%. Non-performing loan ratio dropped to 0.98%, provision coverage ratio was 278.8%, and asset quality continued to improve, enhancing the attractiveness of the equity.

However, Zhongjing’s share sale still faces two major challenges. First, valuation gap: Gao Yang’s reference for valuation is based on four large bank equity transactions in 2025 (PB 0.6-1.05), but Huishang Bank’s current Hong Kong stock PB is only 0.34-0.39, far below expectations, making it difficult to persuade buyers to accept high valuations.

Second, transaction complexity: Zhongjing’s Huishang Bank shares involve both domestic and H-shares, with some shares under judicial freeze or pledge restrictions. Coupled with unresolved disputes with Shanshan, these factors complicate the sale. As of June 2024, Zhongjing Sihai was still wholly owned by Shanshan Group, holding 3.64% of Huishang Bank’s shares, with the return of pledged shares not yet completed. These issues create multiple obstacles for the transaction.

Currently, Zhongjing is negotiating with private enterprises, state-owned enterprises, insurance companies, and asset management firms, but has not yet entered into binding agreements. This nearly twenty-year-long equity game may ultimately end with Zhongjing’s complete exit and a restructuring of Huishang Bank’s shares.

For Zhongjing, this liquidation may be the only way to resolve its debt crisis. Success or failure will determine its survival; for Huishang Bank, Zhongjing’s exit might end the long-standing shareholder internal conflicts and clear some obstacles for A-share listing. However, the bank still faces issues such as weak compliance and internal controls, sluggish performance growth, and many uncertainties ahead.

[References]

① Huishang Bank A-share IPO difficulties: Yan Chen resigns as chairman, three major issues remain after six years of guidance, and the 2 trillion city commercial banks’ A-share listing still in guidance period! . Scale Business. 2025-08-18.

② Huishang Bank shareholder conflicts intensify, net profit declines, non-performing loans rise, possibly delaying return to A-shares. Titanium Media APP. 2021-07-06.

③ Exclusive | Zhongjing Group’s Gao Yang: Currently 8 billion yuan in debt, the most difficult stage, intensive negotiations on Huishang Bank equity sale. Caixin Asset Management. 2026-03-25.

④ Zhongjing and Shanshan’s internal fight continues; Zhengwei Group plans 16 billion yuan to control Huishang Bank. Beiguo Finance. 2021-11-29.

⑤ After Shanshan chairman’s death, stepmother and eldest son fight for control; the company ultimately falls into others’ hands. Prism. 2026-03-26.

⑥ Huishang Bank IPO faces further setbacks: entangled in equity disputes, compliance, and governance issues. Sing Tao. 2026-02-12.

⑦ [Deep Thinking] The fall of the world’s copper king: Wang Wenyin and Zhengwei International’s capital illusions. Investor Network. 2026-03-04.

⑧ 900 million yuan bonds default, chairman under investigation, how does Zhongjing navigate turbulent times? Wild Horse Finance. 2024-09-04.

⑨ Huishang Bank, “Wanmei” exam paper. Niudao Finance. 2026-03-13.

⑩ Seen as the “ultimate solution,” Zhongjing plans to liquidate Huishang Bank shares! Previously proposed interim dividends but rejected. Institutional Home. 2026-03-26.