Hua Xia Bank Co.,Limited is facing mounting pressure from its significant exposure to the solar photovoltaic (PV) sector, after a key production facility of one of its borrowers, Rixin Technology, was seized by multiple authorities. This development marks a shift in the bank's role from a passive account holder to an active participant in asset preservation efforts.
The chill in the solar industry during the summer of 2026 is now being reflected in bank balance sheets. On July 24, Rixin Technology, a company listed on the New Third Board (NEEQ), announced that its core manufacturing plant had been simultaneously sealed off by courts from different regions under multiple case numbers. The list of claimants is extensive, including numerous engineering suppliers chasing payments, and notably, the Wuhan Xiongchu Branch of Hua Xia Bank Co.,Limited. The bank's involvement has evolved from being the original account holder of a frozen corporate account to now proactively applying for pre-litigation preservation and joining the effort to seize the factory.
However, Rixin Technology's default is not an isolated incident. For Hua Xia Bank Co.,Limited, which has total assets of 4.9 trillion yuan, this represents just one case emerging from its substantial credit exposure to the new energy and solar PV sectors. In recent years, amid an "asset scarcity" environment and driven by green finance policies, the bank has made solar and new energy a key focus for its credit allocation. From a bank management perspective, aligning asset allocation with national strategy is understandable. But as the solar PV industry chain enters a phase of deep price declines and capacity consolidation, loans secured by factory equipment are naturally facing asset quality tests.
The Cost of a Heavy Solar Bet
In recent years, commercial banks have generally faced a lack of traditional credit demand. Hua Xia Bank Co.,Limited has strategically pivoted towards "green finance" and "technology finance" as its two main growth drivers. The solar PV industry, possessing both these attributes, naturally became a key lending area. The scale of this lending is significant, characterized by a dual-engine approach of "on-balance-sheet credit plus financial investment."
By the end of 2025, the Hua Xia Bank Co.,Limited Group's green finance business balance reached 531.35 billion yuan, a year-on-year increase of 31.4%. Within this, green loan balances stood at 373.36 billion yuan, a growth rate of 31%, with sub-sectors like energy conservation and emission reduction, and clean energy equipment manufacturing growing by over 30%, far exceeding the bank's average loan growth rate of 8.5%. On the investment side, the bank also increased its exposure, with the year-end green investment balance surging 74.5% to 45.94 billion yuan. To fund these long-cycle assets, the bank issued 20 billion yuan in 3-year green financial bonds in July 2025, creating a matching cycle from funding to asset placement.
A core component of this green asset expansion is residential rooftop solar, primarily channeled through its 82%-owned subsidiary, Huaxia Financial Leasing. By the end of 2025, Huaxia Financial Leasing had total assets of 201.45 billion yuan. Just for residential solar, it had cumulatively deployed 66.15 billion yuan, financing 19.4 GW of installed capacity, representing 8.5% of the national total for residential solar. This covers 25 provinces and has resulted in the construction of 645,000 solar stations. The subsidiary also has exposure to offshore wind, wind turbine installation, new energy vehicles, and new energy storage, with its green leasing asset balance totaling 98.58 billion yuan, or 53.4% of all its leasing assets.
Objectively, this heavy asset allocation tilted towards the green industry has effectively offset the scale gap caused by declining credit demand from the real estate and traditional manufacturing sectors in the short term. However, when looking through the underlying asset structure, the associated asset quality deterioration and capital carrying pressure demand rational scrutiny.
On one hand, the repayment logic for the 645,000 residential solar stations built by Huaxia Financial Leasing is highly dependent on actual power generation income and the creditworthiness of highly dispersed rural customers. Financial data shows that due to macroeconomic conditions, the bank's overall personal loan non-performing ratio (NPR) rose from 1.80% at the end of the previous year to 2.11% in 2025, reflecting the cyclical strain on the repayment capacity of its retail customer base. Against the backdrop of general pressure on the bank's personal loan asset quality, compounded by external variables like grid absorption bottlenecks and electricity price marketization fluctuations, these deeply granular residential solar assets are unlikely to remain immune to the macro cycle. Their long-term credit performance and genuine risk-resilience place stricter demands on the bank's post-loan management.
On the other hand, the rapid scaling of long-cycle new energy infrastructure assets has also created a visible maturity mismatch and capital consumption. In 2025, the group's total assets grew by a robust 8.25%, with green credit, which grew at a staggering 30.99%, being a key driver. However, the 8-to-15-year payback period for solar projects is inherently mismatched with the bank's relatively shorter-term liabilities. This sustained rapid expansion is continuously increasing the bank's capital consumption. Data shows that the bank's core Tier 1 capital adequacy ratio (CET1) fell sequentially from 9.77% at the end of 2024 to 9.38% at the end of 2025, and further dropped to a relatively low 8.97% by the end of the first quarter of 2026. As the bank's scale steadily increases, dynamically balancing the optimization of long-cycle green asset structures with the generation of internal capital has become a long-term strategic challenge for the new management team.
Collateral "Fails" to Mitigate Risk
As the solar PV industry shifts from rapid expansion to a phase of price declines and weakening demand, the risk control methods banks have relied on are being tested. Recent litigation and default cases involving Hua Xia Bank Co.,Limited reveal a clear pattern: the industry downturn has tightened cash flow for some private companies, making the disposal of seemingly reliable factory and equipment collateral less straightforward than expected.
The Rixin Technology case is representative. The company operated on a "build-and-sell" model. Its cash flow problems were directly triggered by a default on a 25.024 million yuan domestic letter of credit loan from Hankou Bank. In 2025, the company's revenue plummeted by 81.8% to 86.906 million yuan, resulting in a net loss attributable to the parent of 42.451 million yuan. Its debt-to-asset ratio stood at 68.1%, with a current ratio of only 0.60, and operating cash flow was a net negative 23.797 million yuan for the year. Combined with total litigation amounts of 130 million yuan as a defendant, the company's cash flow was extremely tight. The Wuhan Xiongchu Branch of Hua Xia Bank Co.,Limited, upon detecting the risk, applied for pre-litigation preservation. However, by then, the company's core factory had already been jointly sealed by courts in Wuhan and Shayang, with multiple engineering suppliers simultaneously pursuing claims. In this situation, realizing the bank's mortgage requires complex judicial procedures, making the recovery cycle and proportion difficult to estimate.
Similar situations have occurred in the Suzhou area. In one case involving Hua Xia Bank Co.,Limited's Suzhou branch, Suzhou Jingang Solar Technology defaulted on two working capital loans totaling 27.8 million yuan, plus accrued interest and penalties of about 1.32 million yuan. Although the court ruled that the bank had priority rights to mortgaged properties within the scope of 42.23 million yuan and 13.21 million yuan, the parent company, Gansu Jingang, had been ordered by the court to commence pre-reorganization, accelerating the loan maturity. Another case involved Zhongli Group and Topray Solar, with the bank pursuing a principal of approximately 79.69 million yuan and accrued interest of nearly 2.99 million yuan, making the total single claim over 82.68 million yuan. A common feature of both cases is that the borrower or its parent company has entered pre-reorganization procedures. Once a company enters reorganization, the realization of the bank's mortgage must be balanced against other factors, introducing significant uncertainty into the final recovery amount.
Some assets have already been removed from the balance sheet through transfer. Hua Xia Bank Co.,Limited's Qingdao Huangdao Branch once issued a 49 million yuan loan to Qingdao Taiyang Gongmao, secured by real estate from Himin Solar. After going through trial, appeal, and enforcement, this debt was transferred to China Cinda Asset Management's Shandong branch at the end of 2021, and then to Xiamen Wangrun Asset Management Co., Ltd. in September 2022. While the path of "litigation, enforcement, and transfer" removes the risk from the bank's books, it also means the bank has absorbed the actual loss.
Looking at these cases, relying solely on factory and land collateral is insufficient to cover risk in cyclical industries. When an industry enters a downturn, the difficulty of collateral disposal and the potential for significant discounts cannot be ignored.
Rewriting the Risk Control Logic
Hua Xia Bank Co.,Limited is clearly aware of the concentration issues and capital consumption pressures left by its earlier concentrated lending. The immediate priority is no longer one-way scale expansion, but rather adjusting risk control for new business and digesting existing non-performing assets.
Recent business developments suggest the bank's risk control thinking is indeed changing. For example, in July 2025, for a large-scale 365 MWp distributed solar project in Haiyan, Jiaxing, signed by the Hangzhou branch, which involved a massive 920 million yuan, 18-year credit facility (with the first tranche of 400 million yuan already disbursed), the risk control focus shifted from simple factory or equipment collateral to "project revenue right pledge plus closed-loop supervision of future cash flow." This locks the primary repayment source onto the project's own power generation revenue. This adjustment represents a direct response to the lessons learned from previous solar asset defaults and is a more pragmatic and mature choice for commercial banks engaging in long-cycle infrastructure financing.
For the existing asset portfolio, the key concerns are the transparency of green assets and the actual cost of disposal. While Hua Xia Bank Co.,Limited has publicly disclosed its green finance portfolio of 531.35 billion yuan, the non-performing loan ratio for the new energy sector has not been separately reported. Given the pressure on the bank's retail credit quality, whether the five-category classification for Huaxia Financial Leasing's nearly 100 billion yuan in green leasing assets is prudent and whether provisions are adequate requires ongoing observation. Another hidden worry involves earlier products like the "Huaxia Solar Loan" launched by the Jinan branch, which relied on solar equipment manufacturers to provide repurchase guarantees. With the ongoing capacity consolidation in the manufacturing sector, the compensation capacity of these manufacturers is also shrinking.
In complex cases like Rixin Technology, which involve multiple seizures and pre-reorganization, accelerating the disposal of non-performing assets presents a practical challenge. The aforementioned 49 million yuan loan to Qingdao Taiyang Gongmao, which went through litigation, enforcement, and eventually a debt transfer to a local AMC to be removed from the balance sheet, took several years. While this path removes the risk from the books, the bank has effectively incurred a principal loss. This illustrates that the cost of cutting off risk contagion during an industry downturn is often high.
Addressing these issues requires action from the new management. Over the past year, Hua Xia Bank Co.,Limited has seen significant personnel changes, with a new team led by Chairman Yang Shujian now in place. They have inherited a balance sheet of 4.9 trillion yuan in total assets, but also a report card showing a thinning risk buffer. In 2025, the bank reduced its provision for credit and other asset impairment losses by 11.7% to 25.42 billion yuan, and its year-end provision coverage ratio fell by 18.59 percentage points to 143.30%, which is below the market's commonly watched warning line of 150%.
Banks will inevitably bear some of the impact from the solar PV industry's cyclical fluctuations. Hua Xia Bank Co.,Limited's experience includes choices made during the initial expansion phase and the realities it must now face during the industry's adjustment period. At the start of the "15th Five-Year Plan" period, the urgent task is not just to recover as much loss as possible through litigation and asset preservation. More critically, while maintaining the growth of its green asset scale, the bank must genuinely improve its industrial research and risk pricing capabilities, finding a sustainable balance between speed and risk control.
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