The Shenzhen municipal government will pay full face value for US$125 million worth of non-performing loans (NPL) at Shenzhen Commercial Bank (SCB) upon its acquisition by Ping An Insurance, the Financial Times reported. Ping An, China's second-largest insurance group, last month agreed to pay US$613 million for just over 89% of the government-controlled lender. The NPL disposal will help Ping An reduce SCB's bad debt burden at the same time as it increases its capital adequacy ratio. The bank's end-of-2005 capital adequacy ratio stood at just 3.3% and the regulator wants this to increase to 8% by the end of this year. HSBC has a 19.9% stake in Ping An.
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