A significant legal judgment has been issued concerning a major loan dispute.
On July 17, 2026, Sunac Real Estate Group Co., Ltd. issued an announcement regarding a major litigation. The Jiujiang Intermediate People's Court in Jiangxi Province issued a Civil Judgment, ordering Daliluntan Investment Management Co., Ltd. to repay a loan principal of 1.69 billion yuan, plus interest, penalty interest, compound interest, and liquidated damages totaling 756 million yuan to BANKOFJIUJIANG (ASX: 06190). The total amount is approximately 2.446 billion yuan. Daliluntan is also required to pay legal fees of 90,000 yuan.
The judgment also clarified the bank's priority right to compensation. BANKOFJIUJIANG is entitled to priority in receiving proceeds from the discount, auction, or sale of eight land use rights owned by Daliluntan located west of Shangmo Village, Dali Town, Dali City, and the 100% equity in Daliluntan held by Yunnan Shili Sunac. Yunnan Shili Sunac, Yunnan Shili Holding Group, and related natural persons bear joint and several guarantee liability in full. Yunnan Sunac bears joint and several repayment liability within 60% of the creditor's rights scope. The court dismissed the bank's other litigation claims.
Nearly three months after filing the lawsuit, the formal judgment has been delivered. BANKOFJIUJIANG has won the case.
Origins of the Loan
The origin of this loan involves a "trust channel."
BANKOFJIUJIANG is registered in Jiujiang, Jiangxi, and has never established any branches in Yunnan Province. How did a regional city commercial bank lend money to Dali, Yunnan? The answer: through Bohai International Trust.
During the second court hearing on January 20, 2026, Bohai International Trust appeared on the defendant list, revealing this lending path where "the bank provided funds, and the trust acted as a channel." BANKOFJIUJIANG acted as the fund provider, while Bohai Trust served as the channel party, collecting service fees without bearing substantive risk. The funds ultimately flowed to Daliluntan, an entity under the Sunac group.
This is not the first time BANKOFJIUJIANG has been flagged by regulators for trust channel activities. In November 2020, the bank was fined 3.3 million yuan for multiple violations, including "illegally issuing land reserve loans through trust channels." The then-president, Pan Ming, was held directly responsible, receiving a warning and a fine of 500,000 yuan.
Public information shows that one of the defendants, Yunnan Shili Sunac, was established in July 2020. This indicates that this 1.69 billion yuan loan was likely issued between the second half of 2020 and the first half of 2021, catching the "last train" before comprehensive regulatory tightening on channel businesses. In April 2022, Sunac announced it could not pay bond interest on schedule, leading to a full-blown debt crisis.
A Persistent Challenge for City Commercial Banks
The situation faced by BANKOFJIUJIANG is not an isolated case. It reflects a common "post-adolescent syndrome" for a generation of city commercial banks.
Around 2010, city commercial banks surged in cross-regional expansion. By the end of 2009, dozens of city commercial banks nationwide had established over 110 cross-regional branches. Driven by a "belief in scale," "going out" became a trend.
However, establishing physical branches in other regions has thresholds, and not every city commercial bank could expand that way. Thus, "non-standard" and "channel" businesses became shortcuts—banks provided funds, trusts acted as channels, and capital flowed across provinces into real estate and financing platforms. This could bypass regulatory red lines on localized operations, increase asset scale, and avoid constraints like loan-to-deposit ratios and loan concentration limits. In 2017, the CBRC's Document No. 55 began blocking bank-trust channels, explicitly prohibiting the illegal investment of trust funds into areas like real estate and local government financing vehicles. The new asset management regulations took effect in 2018, requiring channel businesses to be "cleared as much as possible." However, seeds sown before this are now bearing fruit—the fruit is non-performing loans.
Looking at BANKOFJIUJIANG's financials: As of the end of 2025, seven of its top ten single borrowers were from the real estate sector, with three having balances exceeding 1 billion yuan, and the largest being 1.998 billion yuan. As of the end of 2024, the non-performing loan ratio for real estate loans reached 7.44%. In 2025, the bank wrote off and transferred out 7.353 billion yuan in non-performing assets, a year-on-year increase of 75.95%. Behind these figures lies the mess left by当年的 cross-regional expansion and non-standard business activities. It's not just BANKOFJIUJIANG; many city commercial banks in the industry are now paying for当年的 "scale impulse."
As city commercial banks enter their 30th year, regulators repeatedly emphasize "establishing a local foothold and specialized operations," making the direction very clear.
Shifting to Contraction
Objectively, the new management of BANKOFJIUJIANG is taking corrective actions. In 2025, its total assets were 523.435 billion yuan, operating revenue was 10.477 billion yuan, and net profit was 841 million yuan, a year-on-year increase of 10.4%. The non-performing loan ratio decreased from 2.19% to 1.93%, indicating the right direction. The balance of real estate loans decreased by 1.163 billion yuan year-on-year to 21.043 billion yuan. Large loans to real estate clients among the top ten borrowers are being gradually reduced. Capital increases, share expansions, and perpetual bond issuances are also progressing.
Winning the 2.446 billion yuan lawsuit is a step in the right direction. After this step, there is still a long road ahead.
The first half of the thirty-year journey for city commercial banks was about scale; the second half is about quality.
Moving slowly is acceptable; as long as the direction is correct, the destination is not far. What was needed before was addition; what is needed now is subtraction.