China Targets Evergrande Risks With $1.55 Billion Bank Deal (3)

China stepped in to buy a stake in a struggling regional bank from China Evergrande Group as it seeks to limit contagion in the financial sector from the embattled property developer.

Evergrande agreed to sell a 20% stake in Shengjing Bank Co. to the local Shenyang government for 10 billion yuan ($1.55 billion), with the bank demanding that all proceeds go to settle debts with the lender, according to a statement to the Hong Kong stock exchange. In that case, the sale would do little to help Evergrande pay its massive debts to bond holders and homebuyers.

The sale illustrates ...