The company will be selling a nearly 20% stake in Shengjing Bank to state-owned Shenyang Shengjing Finance Investment Group.
Over a third of Shengjing Bank is owned by the property giant, and the lender has already been hurt by Evergrande’s troubles.
While Evergrande has not publicly discussed payments due on its dollar-denominated bonds, the company did reach an agreement on interest due on a yuan bond last week.
Evergrande is China’s most indebted developer, with more than $300 billion worth of liabilities. That includes nearly $20 billion in international bonds, according to data provider Refinitiv Eikon.
Fitch Ratings further downgraded Evergrande on Tuesday, saying that the group was “likely to have missed [an] interest payment on its senior unsecured notes.”
China moves to protect consumers
While it did not refer to Evergrande specifically, the central bank has been pumping cash into the financial system over the last few days to help stabilize the situation and calm nerves.
Iris Pang, chief economist of Greater China at ING, said that the move was “a symbolic signal to the market, that the Chinese government is in control of the incident, and is not letting the incident become a crisis.”
Some analysts have warned of potential shockwaves across the world’s second biggest economy if the damage is not contained.
Evergrande employs some 200,000 people, and it has said that it indirectly helps sustain more than 3.8 million jobs each year.
Boosting liquidity “will make sure that real estate-related suppliers and contractors stay afloat. This really prevents any large-scale layoffs from those sectors,” she told CNN Business.
Zhu added that it would also help with another key priority, which is ensuring that work continues on property projects so that home buyers aren’t “left on the hook.”
Authorities appear to be working to limit the fallout in Hong Kong, too.
In a statement to CNN Business, an HKMA spokesperson said that it maintained “regular dialogue with the industry,” and would “not comment on the details of our discussions with the banks.”
But the de facto central bank “has been keeping the credit risk facing the banking sector under close monitoring,” the representative added. “Our assessment is that the overall risk to banking stability remains manageable.”
But Pang noted that a central question remains: “what the government wants.”
“[Is] the government being prepared for Evergrande to default from all these bonds? That will create volatility in the market. Or does the government want Evergrande to continue running and operating, and building and selling?” she said.
“We are still not sure of what the government wants … That’s the issue in the market right now.”
— CNN’s Beijing bureau, Diksha Madhok, Hanna Ziady, Laura He and Julia Horowitz contributed to this report.