BEIJING, (Reuters) – China’s Zhongyuan Bank Co. is a local lender in Henan’s central province. Beijing has called for smaller banks to consolidate in order to reduce risks to the region’s banking system.

According to Zhongyuan Bank’s Wednesday filing with Hong Kong Exchange, Zhongyuan Bank was created by the 2014 merger of 13 banks in Henan. It will buy Bank of Luoyang and Bank of Pingdingshan, as well as Bank of Jiaozuo China Travel Services Co.

Bank of Luoyang was listed as one of 20 main banks for embattled property giant China Evergrande Group，according to the developer’s interim report released in September.

The loan exposure of Bank of Luoyang to Evergrande has not been disclosed by the Bank of Luoyang. According to an annual report, 9.15% (or 9.15%) of the outstanding loans of Bank of Luoyang were lent out to the property industry at the end 2020.

Zhongyuan Bank stated that after the possible merger was completed, it would continue expanding its business and improving the financial services available for economic and social development in the province.

Zhongyuan didn’t elaborate on how the bank would settle the assets or liabilities of three smaller banks and warned that the deal was not yet finalized.

China’s northeastern Province of Liaoning established Bank of Liaoshen. This new commercial bank was created by merging several local banks amid a weakening economy.

COVID-19, which caused havoc to the Henan economy, killed over 300 people in July. This increased banking pressure.

Reuters reached Zhongyuan Bank as well as Bank of Luoyang but they didn’t respond immediately to questions.