The bank that lost billions of RMB on its investments with troubledBaoshang Bank is now coming to its rescue, reported Caixin.
Hong Kong-listed Huishang Bank has disclosed a plan to purchase part of the assets and liabilities of Baoshang Bank, which regulators took the rare step of taking over in May.
Huishang Bank also announced that it plans to invest in a new provincial-level commercial bank, according to a filing to the Hong Kong Stock Exchange on Tuesday. The city commercial bank, which is based in East China’s Anhui province, said that it will make a one-off capital contribution of no more than RMB 3.6 billion ($518.5 million), giving it a stake up to 15% in the new bank.
This investment is also related to Baoshang Bank, said Caixin sources. The new commercial bank is part of regulators’ plan to defuse the troubled lender’s risks. Just like how regulators restructured scandal-plagued Anbang Insurance Group, the authorities plan to set up a new entity — in this case a new commercial bank — to take over part of Baoshang Bank’s problematic assets, the sources said.