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SINGAPORE (Dec 18): United Overseas Bank has agreed to subscribe to RMB1.86 billion ($360 million) worth of shares in troubled Hengfeng Bank Co in China.

Hengfeng Bank is a Chinese commercial bank based in the Eastern province of Shandong with branches across the country.

The share purchase is part of a RMB100 billion private placement by Hengfeng Bank.

Hengfeng Bank has failed to disclose its financial statements since 2017 due to management and liquidity issues.

The Shandong government is speeding up the restructuring of the bank to and prevent contagion risks after the lender almost exhausted its capital.

As at end 2016, Hengfeng Bank had 1.2 trillion yuan ($232 billion) of assets, according to its most recent annual report.

In a Wednesday night filing, UOB says the subscription is in line with the group’s focus on driving regional connectivity and building ecosystem partnerships to facilitate business and investment opportunities opening up across the region.

"The collaboration with Hengfeng Bank will help businesses benefit from Shandong’s economic progress and financial liberalisation. It is also in tandem with the partnership between Singapore and Shandong to promote business flows into Southeast Asia with Singapore as a regional hub," says UOB.

UOB plans to fund the deal in cash with internal resources.

Shares in UOB closed 34 cents higher at $26.58 on Wednesday.