Bank of Jinzhou, based in Northeast China's Liaoning Province, released a statement on Thursday saying that it is discussing with multiple institutions for possible strategic investments under the guidance of local government departments.

The bank said that its business is operating normally.

Industry insiders said that Bank of Jinzhou may have some borrowers that failed to repay their loans on time, causing liquidity problems. According to a report from sina.com, corporate loans account for more than 90 percent of the bank's loan portfolio.

The local branch of China's central bank and other regulators held a meeting with local financial institutions recently to discuss liquidity problems of the bank, Reuters reported on Wednesday, citing anonymous sources.

Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, told the Global Times on Thursday that "injecting abundant funds into the bank and helping it find investors would be a quick way to help it overcome its liquidity problems.

"As financial institutions in China face more competition in businesses such as asset management from third-party payment institutions, small banks that are more vulnerable to defaults are prone to encountering operational problems," Dong said.

But Dong noted that the bank's situation is an isolated case and there is no need to worry about the country's financial system as a whole.

A Beijing customer of the bank told the Global Times on Thursday that he redeemed his one-year financial products as scheduled earlier in the day. The instruments had a 5.8 percent interest rate - higher than the market average of about 4 percent.

"It shows that the bank is still operating normally," the customer said.

Ernst & Young (E&Y), the bank's former auditor, declined to sign off on the 2018 annual report and quitted as its auditor in May. E&Y warned at the time that some loans may not have been used for the purposes stated on the related documents, according to the bank's statement sent to the Hong Kong Stock Exchange.

Earlier this year, the central bank and the banking regulator announced that Inner Mongolia-based Baoshang Bank would be taken over for one year starting on May 24, citing "serious credit risks," according to the Xinhua News Agency. 

The Bank of Jinzhou, founded in 1997, listed on the Hong Kong Stock Exchange in 2015 with registered capital of 6.782 billion yuan ($986.8 million), according to the website of the bank.

Trading of the bank's shares has been suspended since April 1, when the price was HK$7 ($0.896).