Chinese bank Ping An yesterday acknowledged a large indirect holding in China Huishan Dairy, which had $4.1bn wiped from its market value last week, highlighting wider risks from exposure to the financially distressed company.

Huishan’s shares plummeted 90 per cent on Friday, becoming the latest group with operations focused in mainland China to experience a sudden collapse in its Hong Kong share price, raising questions about corporate standards in the city — a magnet for Chinese groups seeking international capital. Shenzhen-listed Ping An said a company controlled by Huishan’s chairman, Yang Kai, obtained credit from the bank in 2015, by pledging as collateral shares equivalent to about 25 per cent of the company’s total.

Ping An could take a 2 per cent hit to pre-tax profit this year from an impairment of those assets, said Leon Qi, an analyst at Daiwa Capital Markets, in a note. Ping An posted pre-tax profit of roughly $4.6bn for 2016.