A major Chinese bank has listed a special asset portfolio valued at over 24.8 billion yuan for sale on a prominent property exchange.

The portfolio from ZYBANK (01216.HK) comprises 72 separate credit assets, with notable exposures to well-known companies such as Gome Electric Appliances and Sichuan Languang Development. Several of these assets are already under judicial enforcement, with some debtors having ceased operations or entered bankruptcy proceedings.

Key Details of the Asset Portfolio

Analysis of the listing reveals that real estate-related credits dominate the portfolio, which is characterized by long overdue periods, high concentration in single assets, and significant exposure across multiple provinces. The overall interest-to-principal ratio is notably high at 33.4%, indicating a substantial interest burden. The top five assets alone account for approximately 9.35 billion yuan, representing nearly 40% of the total portfolio value. Credits located outside the bank's home province amount to around 8 billion yuan, making up over 30% of the total.

An expert in the field commented that this bulk sale represents a concentrated effort to dispose of historical burdens left over from the bank's merger with three other institutions in 2022. The strategic use of the term 'special assets' instead of 'non-performing assets' is seen as a move to mitigate negative market perceptions and attract a broader range of potential buyers, reflecting a flexible and market-oriented disposal strategy.

Portfolio Composition and Notable Exposures

The "2026 Special Asset Project" from ZYBANK has a total disclosed credit value of approximately 24.865 billion yuan. This sum is broken down into a principal amount of about 18.633 billion yuan and accrued interest of roughly 6.218 billion yuan. The portfolio exhibits a high degree of concentration, with the largest single asset, related to a tourism town project, valued at 3.677 billion yuan.

Real estate and related sectors form the core of the portfolio, both in terms of the number of projects and the total credit value. Assets are primarily located within Henan province, but a significant portion, valued at about 8 billion yuan, is spread across other regions including Hainan, Fujian, and Sichuan.

Among the debtors are several former industry leaders. The portfolio includes a bundled transfer of non-performing assets related to Henan Gome Electric Appliances, with a total claim of 181 million yuan. It also holds credit bonds issued by Sichuan Languang Development, involving a total claim of 872 million yuan.

The expert noted that listing such a large portfolio in bulk is a significant step by the bank to accelerate the disposal of assets amid considerable asset quality pressure. These long-overdue, non-performing assets, with their high single-name risk and cross-province exposure, have been eroding capital and profitability. This bulk sale is an active measure to clear these risks and free up credit capacity.

New Leadership Faces Significant Test

The move comes just two months after a new leadership team took office at the bank in April, with changes to both the Chairman and President roles. The new management has been active, having also listed a batch of personal non-performing loans for transfer in May.

The asset quality challenges for ZYBANK are deep-rooted. The bank was formed through the merger of 13 city commercial banks in 2014 and later absorbed three more banks in 2022. While this rapid expansion pushed its total assets past the trillion-yuan mark, it also brought with it a substantial legacy of non-performing loans. The current bulk sale is viewed as a concentrated effort to address the historical burdens from the 2022 merger.

Even after a prior risk transfer of approximately 25.9 billion yuan in assets to a local asset management company ahead of the 2022 merger, the bank's non-performing loan balance still saw a significant increase by the end of that year. Data shows that from 2021 to 2024, the bank's non-performing loan ratio fluctuated between 1.93% and 2.18%. By the end of 2025, the ratio had improved to 1.96%, but this still lagged behind the industry average for city commercial banks. Furthermore, the bank set aside 13.72 billion yuan for asset impairment losses in 2025, which impacted its net profit.

Broader Industry Context

The expert highlighted that the banking sector has been intensifying efforts to dispose of non-performing assets over the past two years. The annual disposal volume has consistently exceeded 3 trillion yuan since 2020, reaching 3.8 trillion yuan in 2024, with both national and regional banks actively participating, forming a regularized mechanism.

This trend is driven by several factors: persistent asset quality pressure, particularly in retail lending and real estate; regulatory policies that encourage and expand pilot programs for bulk transfers; and the need to manage capital adequacy ratios by offloading non-performing assets to reduce risk-weighted assets and free up capital for new lending.

In summary, the disposal of non-performing assets in the banking industry is evolving from a reactive process to one of active management, with market-based transfers entering a phase of rapid growth.

Requests for comment on the background and subsequent handling of this special asset portfolio sent to ZYBANK on June 24th had not received a response by the time of publication.