(Yicai Global) April 24 -- A troubled and little-known Chinese bank is about to become the country’s fifth-biggest lender in terms of registered capital.

The China Banking and Insurance Regulatory Commission gave Hengfeng Bank, a commercial lender based in Yantai, Shandong province that intends to bring in state-owned investment, permission to increase its nominal capital 10-fold to CNY111.2 billion (USD15.7 billion).

The move will catapult it ahead of Postal Saving Bank of China, with CNY87 billion of registered capital, and Bank of Communications, with CNY74.3 billion. Only Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank will be bigger.

Formed in 2003, Hengfeng Bank has total assets of about CNY1 trillion (USD141.2 billion). It has been in turmoil in recent years due to executive corruption cases. Former Chairman Jiang Xiyun was investigated in 2014 and sentenced to death with a two-year reprieve at the end of last year for corruption and bribery. Cai Guohua, his successor, was investigated in 2017 and is now awaiting a court decision.

In 2018, Chen Ying, the former head of the Shandong Banking Regulatory Commission, became the bank’s current chairman and set about getting operations back on track.

At the end of last year, Hengfeng Bank announced a non-public offering of 100 billion ordinary shares. Of these, Central Huijin Investment, a state-owned financial holding platform, subscribed to 60 billion shares, the Shandong Provincial State-owned Assets Supervision and Administration Commission took 36 billion shares, and the remaining went to Singapore’s United Overseas Bank and other shareholders.

Hengfeng Bank is a successful example of regulators promoting banking reform and preventing risks in recent years, CBIRC Vice Chairman Zhou Liang said earlier this month. The bank has dismissed chairmen, presidents and executives involved in corruption, and pulled illegal equity. It has also completed reform and reorganization by selling non-performing assets, local government capital injections and the introduction of new investors, while avoiding major market volatility during the process.

Editors: Dou Shicong, Peter Thomas