Troubled real estate developer Evergrande Group is to sell 1.75 billion shares in Shengjing Bank, 20 percent of the bank’s issued share capital, to Shenyang Shengjing Finance Investment Group, a state-owned company, for 10 billion yuan (US$1.5 billion).

Shengjing Bank has demanded that all proceeds from the transaction be used to repay Evergrande’s debt to the bank. Evergrande acquired 36.4 percent of the bank in 2016 and sold a two-percent stake for one billion yuan in August to cover the debt. Shengjing Bank reported a net profit of one billion yuan (US$155 million) in the first half of 2021. Shenyang Shengjing’s stake in the bank will increase to 20.8 percent, making it the largest shareholder.

Evergrande said that a state-owned enterprise would stabilize operations at Shengjin Bank and increase the value of the 14.6 percent stake it would continue to hold.