It is common for wealth management returns to fluctuate with market conditions, but losses—or even failure to recover principal—in interbank wealth products are rare. Yet this is precisely the predicament facing three rural commercial banks: Ya'an Rural Commercial Bank, Henan Wugang Rural Commercial Bank, and Qinghai Xining Rural Commercial Bank.

Recently, GRCB (01551.HK) disclosed major litigation involving these three banks over disputes related to its "Anxin Return No. 262" wealth management product, with claims totaling approximately 126 million yuan.

Sources close to the three banks revealed that "Anxin Return No. 262" was an interbank wealth product issued by GRCB. The three-year product, initially offering an expected annualized return of 4.5%, failed to make payments due to bond defaults in its underlying assets.

**Prolonged Legal Battles** "When the product matured, GRCB informed the rural banks that it couldn’t make payments because of a default in one of the underlying assets," a source familiar with the case said. After failed negotiations, the banks resorted to lawsuits.

The lawsuits filed by the three banks against GRCB all fall under "wealth management contract disputes."

Ya'an Rural Commercial Bank was the first to sue in May 2022, demanding repayment of principal and interest totaling 60.25 million yuan. In August 2023, Guangzhou Tianhe District Court ruled in favor of Ya'an, ordering GRCB to pay 36.33 million yuan. GRCB appealed, and in December 2024, Guangzhou Intermediate Court overturned the ruling and ordered a retrial. A retrial hearing took place in June 2025, with a verdict pending.

Henan Wugang Rural Commercial Bank sued in 2023, initially seeking the return or transfer of its wealth management assets. However, during a December 2023 hearing, it amended its claim to demand 31.67 million yuan plus 5.7% annualized returns. In July 2025, the court dismissed all claims and ordered Wugang to bear litigation costs of 200,100 yuan. Wugang appealed in August 2025, with a second hearing held in September. The case remains under review.

Qinghai Xining Rural Commercial Bank filed the latest lawsuit in July 2024, seeking repayment of 33.62 million yuan (including legal fees). A third hearing occurred in March 2025, with no verdict yet.

"The court is considering consolidating the three cases," a source said. "GRCB argues that third-party asset managers should share liability, so the banks may add them as co-defendants."

**Third-Party Liability in Question** The cases involve four third-party firms: ICBC Credit Suisse Investment Management, Wanjia Fund Management, Shanghai Zhiyi Investment Management, and Shunfeng Photovoltaic Investment (China).

In both Wugang and Xining’s lawsuits, Guangzhou Tianhe District Court issued public notices to these firms after failing to serve them via standard legal procedures.

When asked about their roles, GRCB did not respond. However, a rural bank employee disclosed that GRCB positioned itself as the "product manager," attributing asset management duties to third parties.

"Anxin Return No. 262" primarily invested in bonds and repo agreements, typically low-risk. However, a defaulted credit bond left GRCB unable to fulfill its obligations.

"GRCB knew about the default before maturity but delayed disclosure, impairing our decision-making," the employee said.

Legal expert Liu Yang noted that liability hinges on two factors: contractual terms defining GRCB’s role (issuer vs. asset manager) and statutory duties (e.g., fiduciary obligations, disclosure requirements under banking regulations).

**Financial and Governance Strain** GRCB disclosed in its 2024 annual report that it faced three major lawsuits involving 126 million yuan, with 90.05 million yuan in provisions. By mid-2025, this rose to four cases totaling 208 million yuan, with provisions at 85.05 million yuan.

The bank’s troubles extend beyond litigation. Multiple executives have been investigated for corruption since 2019, including former Chairman Wang Jikang and ex-Vice President Peng Zhijun. In 2024, former President Yi Xuefei was also probed for disciplinary violations.

Financially, GRCB’s revenue and net profit have declined since 2019. As of Q3 2025, its assets stood at 1.42 trillion yuan, with revenue down 2.35% YoY to 11.02 billion yuan and net profit plunging 18.73% to 1.72 billion yuan.

Asset quality remains weak, with non-performing loan ratios hovering between 1.66% and 2.11% from 2020 to 2024. A 14.59 billion yuan bad asset sale in 2024 helped lower NPLs, but capital adequacy ratios dipped by September 2025.

Founded in 2009, GRCB traces its roots to Guangzhou Rural Credit Cooperative (1952) and listed in Hong Kong in 2017.