BANK of Jinzhou, which suspended trading in its shares earlier this year and saw its auditor quit, said that it is in talks with multiple parties for possible strategic investment, and that it is operating normally.

The statement on the bank’s website triggered fresh jitters about the health of smaller banks in China’s northeast, after regulators took over Inner Mongolia-based Baoshang Bank on May 24, sending some firms’ borrowing costs spiking.

Discussion on possible strategic investment is under guidance from local government and regulatory bodies, the Hong Kong-listed bank said in its statement.

Last month, China’s central bank introduced a credit risk hedging tool for holders of debt issued by Bank of Jinzhou, the latest measure by regulators to calm market nerves about the health of smaller banks.

In a separate statement last week, China’s banking and insurance regulator said it will study market-based ways to restructure and reform high-risk institutions.

The banking and insurance regulator has told the country’s biggest distressed debt managers to prepare contingency plans to take over or invest in high-risk small and medium-sized banks, two sources involved in the discussions said Friday.

The last time a state-owned asset management company (AMC) acquired a stake in a regional bank was in 2016.

(SD-Agencies)