(Yicai Global) March 8 -- Bank of Nanjing is preparing to buy an additional 41 percent equity in struggling Chinese retailer Suning.com’s consumer finance arm to become the majority shareholder as consumer credit increasingly represents an important area of growth for Chinese lenders.

Bank of Nanjing will fork out CNY388 million (USD61 million) to hike its stake in Suning Consumer Finance to 56 percent from 15 percent, the Nanjing, eastern Jiangsu province-based bank said yesterday. The deal, signed on March 4 and which is still subject to regulatory approval, will give the lender access to the company’s coveted consumer finance license.

Bank of Nanjing will pay Suning CNY341 million for 36 percent equity, reducing the Nanjing-based retailer’s holdings to 10 percent, and CNY47.3 million to another shareholder, Jiangsu Yanghe Brewery JSC, to buy out its 5 percent stake.

The bank’s majority shareholder French banking group BNP Paribas will also invest CNY28.4 million (USD4.5 million) to increase the stake of its unit BNP Paribas Personal Finance to 18 percent from 15 percent, the Chinese lender said. Bank of Nanjing and BNP Paribas were two of the original five backers when Suning Consumer Finance was set up in 2015.

Caught up in a liquidity crisis, Suning brought in strategic investors including Jiangsu province state-owned assets and industrial capital twice last year, raising more than CNY12 billion (USD1.9 billion). Founder Zhang Jindong stepped down as chairman last July.

Personal consumer loans is becoming big business in China. Thirty consumer finance companies have been set up on the mainland so far. Of these, 19 have banks as the biggest shareholder and lenders own stakes in 25 of them.

Bank of Nanjing’s share price [SHA:601009] was trading down 0.68 percent at CNY10.28 (USD1.70) as of 11:30 a.m. China time today. Suning’s stock [SHE:002024] was down 3.09 percent at CNY3.45 (USD0.60), close to a historical low.

Editor: Kim Taylor