JIUTAI RCB bids farewell to the Hong Kong Stock Exchange

After the state-owned major banks "incorporated" their branches, the reform of Jilin rural credit institutions has once again made new progress.

On November 24, JIUTAI RCB announced its formal delisting after the market closed, bidding farewell to the Hong Kong stock market where it had fought for nearly 9 years, becoming the first rural commercial bank to delist from Hong Kong stocks.

More than half a year before the delisting, the bank had suspended trading on March 12, with its stock price fixed at HKD 0.41 per share at that time.

In 2023, JIUTAI RCB faced performance pressure, with both revenue and net profit experiencing a "double decline," with profits dropping by more than 90%.

As of now, the bank has not disclosed its mid-term performance for 2024 and 2025, only revealing through forecasts that the company incurred losses in both reporting periods, amounting to RMB 1.7-1.9 billion and RMB 898 million, respectively.

From JIUTAI RCB's statements, the main reasons for its delisting are twofold:

First, under the sluggish stock price, its financing function has basically been lost;

As of the suspension date, the Hang Seng Index and the Hang Seng Mainland Bank Index had cumulative increases of 21.19% and 14.59% respectively for the year, while during the same period, the bank's stock price had cumulatively dropped by 6.82%, with daily trading volume accounting for only 0.13% of the total issued H shares.

Second, to save on operating costs and leave room for development;

The bank stated that delisting could save compliance and related costs, reallocating resources to business operations and leaving space for adjustments.

JIUTAI RCB's new owner is Jilin Financial Holdings, which is controlled by the provincial finance department and currently holds several local financial institutions, including Jilin Bank, JIUTAI RCB, and Jilin Trust.

In early July this year, Jilin Financial Holdings issued a full cash offer for JIUTAI RCB's H shares, with acquisition prices of HKD 0.70 per H share and RMB 0.63 per domestic share, representing a premium of about 70% compared to the suspension price.

Three months later, the Jilin Regulatory Bureau approved the equity change notification for JIUTAI RCB, with Jilin Financial Holdings' shareholding ratio reaching 75.22%.

Due to Jilin Financial Holdings' core role in the local rural credit reform, the industry generally views JIUTAI RCB's delisting as a key step in the reform of the Jilin rural credit system.

In July, the Jilin Provincial Finance Department issued special bonds for small and medium-sized banks worth RMB 26 billion, which were indirectly invested in by Jilin Financial Holdings, all used for JIUTAI RCB's capital replenishment project;

A month later, JIUTAI RCB, which absorbed the first batch of 13 banks and credit cooperatives including Changchun Rural Commercial Bank, commenced operations.

Comparing with other regions, in the new round of rural credit institution reform, Hainan and Liaoning, which adopted a unified legal person model earlier, have reduced the number of rural commercial banks in the province to 2, while the number of rural commercial banks in Jilin Province still stands at 39.

JIUTAI RCB disclosed that the company will "gradually absorb and merge other rural commercial banks and initiate the establishment of provincial village and town banks, ultimately achieving a unified legal person for the entire province";

This may imply that the delisting is not the end for JIUTAI RCB, and in the future, the bank may still be merged into Jilin Rural Commercial Bank