China’s troubled Baoshang Bank will be taken over by local governments and a group of state firms as Beijing looks to shore up some of the country’s weakest lenders, reported Reuters.
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 reorganized 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, said a Reuters source at the People’s Bank of China.
Other strategic investors in the revamped Baoshang Bank include Huishang Bank, China Construction Bank and a national deposit insurance fund managed by the central bank.