China’s central bank has announced the first bankruptcy of a commercial bank in nearly two decades, authorizing the liquidation of regional lender Baoshang Bank, a year after it seized control of the institution, reported the Financial Times.
The decision to let the lender go bankrupt is a high-profile departure for China’s government, which has long been reluctant to allow lenders to fail for fear of undermining confidence in the country’s banking system.
“Bank of Baoshang will be filed for bankruptcy and the original shareholders’ equity and unprotected creditors’ rights liquidated in accordance with the law,” the People’s Bank of China said in its quarterly monetary policy statement on Thursday evening in Beijing.
The decision was made after finding “severe insolvency” during the regulator’s review of Baoshang’s business, the central bank said.