Chinese regulators said on Friday they would need another year to sort out the restructuring of nine financial firms connected to embattled Tomorrow Holdings, as authorities seek to stem systemic financial risks in the pandemic-hit economy.
Regulators seized control of the institutions last July, after their owner Tomorrow Holdings Co Ltd was targeted in a government crackdown on risks posed by financial conglomerates.
The takeover period of the nine mid-sized firms will be extended for another year till July 16, 2022, according to statements from the China Banking and Insurance Regulatory Commission (CBIRC) and the China Securities Regulatory Commission. (CSRC)
The six firms taken over by the CBIRC are Tianan Property Insurance Co of China, Huaxia Life Insurance Co, Tianan Life Insurance Co and Yi’an P&C Insurance Co., as well as New Times Trust Co and New China Trust Co.
The other three firms are New Times Securities, Guosheng Securities and Guosheng Futures.
“The takeover team has actively pushed forward the asset liquidation and confirmation of those firms, figured out the basic situation of the risk they contained, and maintained normal operation of their daily businesses,” CBIRC said in a statement.
The extension of the takeover period is to resolve the financial risks as soon as possible and to maintain financial stability, the CBIRC said.
Tomorrow‘s Chairman Xiao Jianhua was investigated more than four years ago amid the state-led conglomerate crackdown, and has not been seen since 2017.
In a previous takeover case involving Tomorrow, the central bank said the systemic risk posed by the group involved excessive borrowing and misuse of funds from the financial firms it owned.
Regulators took over Baoshang Bank in 2019, a lender once controlled by Tomorrow, citing severe credit risks.
The lender, which had operated nationwide, has been revamped into a much smaller lender back in its home region Inner Mongolia.