According to local financial report, the local government may provide bailout fund to support Chinese Bohai Steel Group, the indebted state-owned conglomerate located in northern China, to restructure its debts.

Bohai's 105 creditors include the Bank of Beijing, Bank of Tianjin and Tianjin Binhai Rural Commercial Bank, each of which is owed more than 10 billion yuan, sources said. Several major nationwide banks are also holding toxic debt, including China Construction Bank, Bank of China and Industrial Bank.

A creditors committee formed in March by the government of Tianjin, which owns Bohai, drafted a restructuring plan. However, a person closed to the government's State-owned Asset Supervision and Administration Commission (SASAC) said that progress toward a settlement has been stymied by concerns raised by bankers.

Now, the situation has some changes. The Tianjin government plans to create a local asset manager to assist in the debt workout of Bohai Steel, alongside other troubled Tianjin enterprises.