Baoshang Bank to Be Re-constituted as “Mengshang Bank,” CCB and Huishang to Serve as Key Shareholders

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Beleaguered Inner Mongolian lender Baoshang Bank is set to be reconstituted and rebranded with the participation of some of China’s leading regional and big state-owned lenders.

Anhui-province’s Huishang Bank recently unveiled plans to participate in the launch of a new province-level financial institution in Inner Mongolia, in collaboration with a cohort of investors that include the provincial government and a subsidiary of the China Construction Bank.

According to domestic media reports the proposed financial institution will bear the name of Mengshang Bank (蒙商银行) and serve as a “New Baoshang Bank” that will take over the beleaguered regional lender’s operations within Inner Mongolia

Mengshang Bank will have reg­is­tered cap­i­tal of ap­prox­i­mately 20 bil­lion yuan and the following equity structure:

  • Inner Mongolia’s finance department and state-owned enterprises: 50.16%,
  • The Depository Insurance Fund Management Co., Ltd. (存款保险基金管理有限责任公司) : 29.84%,
  • Huishang Bank: 15%,
  • CCB subsidiary Jianxin Fi­nance As­set In­vest­ment Co., Ltd. ( 建信金融资产投资有限公司): 5%.

Huishang Bank was one of Baoshang Bank’s biggest creditors prior to the latter’s takeover by the central government in mid-2019, and is reported to have sustained 3 billion yuan in losses via interbank loans.

Huishang Bank also an­nounced on 6 Feb­ru­ary that it plans to ac­quire Baoshang Bank’s Bei­jing branch, Shen­zhen branch, Chengdu branch and Ningbo branch, whose as­sets and busi­ness are col­lec­tively val­ued at around 106.5 bil­lion yuan. 

On 24 May 2019 the Chi­nese cen­tral bank and the China Bank­ing and In­sur­ance Reg­u­la­tory Com­mis­sion (CBIRC) an­nounced the launch of a takeover of Baoshang Bank for a pe­riod of one year in the wake of “se­vere credit risk,” with man­age­ment of the bank en­trusted to lead­ing state-owned lender China Con­struc­tion Bank. 

The move marked the first time that Chi­nese reg­u­la­tors have launched an of­fi­cial takeover of a com­mer­cial bank, as well as the sec­ond time in lit­tle over a year that they had taken over a fi­nan­cial in­sti­tu­tion fol­low­ing their ac­tions with re­gard to An­bang Group in Feb­ru­ary 2018. 

Do­mes­tic an­a­lysts say that the de­ci­sion helped to pre­vent a bank run in the re­gion of In­ner Mon­go­lia, while oth­ers re­ferred to the in­ci­dent as a “mini-Lehmann mo­ment” which would lead to the con­sol­i­da­tion of other small-scale Chi­nese lenders

Related stories

Huis­hang Bank Plans to Ac­quire Four Baoshang Bank Branches, In­vest in New In­ner Mon­go­lian Fi­nan­cial In­sti­tu­tion

Baoshang Bank Takeover Con­tin­ues to Ham­per In­ter­bank CD Is­suance of Chi­na’s Smaller Lenders

Chi­nese Cen­tral Bank Sheds Fur­ther Light on Baoshang Bank Takeover

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