Local governments, state firms to take over China’s Baoshang Bank

Photographer: SeongJoon Cho /Bloomberg

China’s troubled Baoshang Bank will be taken over by local governments and a group of state firms, a central bank official with direct knowledge of the matter said, as Beijing looks to shore up some of the country’s weakest lenders.

Financial regulators took control of Inner Mongolia-based Baoshang Bank last May, citing serious credit risks. That takeover rattled domestic markets, pushing up interbank funding costs for some smaller lenders and prompting the central bank to inject cash into the banking system to prevent contagion risks.

The governments of China’s Inner Mongolia Autonomous Region and Baotou, a major city in the region, will lead the acquisition of at least a 50% stake in a reorganised Baoshang Bank, according to the official, who declined to be identified given the sensitivity of the matter.

State firms in Inner Mongolia will also participate in the takeover, the official said.

The People’s Bank of China (PBOC) said in November that asset and cap­i­tal ver­i­fi­ca­tion work at Baoshang was nearly complete, and that it would restructure the lender as soon as possible.

Other strategic investors in the revamped Baoshang Bank include Huishang Bank, China Construction Bank (CCB) and a national deposit insurance fund managed by the central bank, the official said.

The official did not elaborate on the value of the investment or specific shareholding details.

Reuters reported earlier this month that Huishang Bank planned to take over four branches of Baoshang under a state-led reorganisation.

Huishang also said recently that it plans to invest up to 3.6 billion yuan ($524.29 million) to hold up to 15% of a newly created provincial commercial bank, without naming the lender, although the sources said at the time that the investment was linked to the Baoshang reorganisation.

The Inner Mongolia and Baotou governments could not be reached for comment. Baoshang and Huishang declined to comment. CCB didn’t reply to a Reuters request for comment.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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