PBOC’s Shanghai Office Flags Support for Smaller Banks with Provisional Liquidity Issues, Punishment for Rumour Mongers

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The Shanghai office of the Chinese central bank has flagged the provision of support to small and medium-sized lenders that meet with temporary liquidity problems, in the wake of the government’s takeover of Inner Mongolia’s beleaguered Baoshang Bank.

The Shanghai office of the People’s Bank of China (PBOC) recently convened a specialist meeting on “further driving finance to support the real economy and the prevention and dissolution of financial risk.”

The meeting stated that the severe credit crisis suffered by Baoshang Bank which triggered statutory conditions for lawful takeover was “entirely an isolated case.”

According to the meeting China’s small and medium-sized banks are currently free from irregularities in general, while liquidity remains comparatively ample and all liquidity indices remain at normal levels overall.

“[We] hope that everyone objectively and calmly looks [at the matter], maintains focus and does not believe rumours on the market…PBOC is promptly responding, confirming related policies, and has adopted effective measures to prevent financial market risk and maintain financial stability.

“The next step will be to continue to closely track financial market trends, focus heavily on the liquidity status of small and medium-sized banks and other financial institutions, listen to market voices, promptly respond to market concerns, promptly provide support to small and medium-sized banks that meet with provisional liquidity problems, and severely punish those people who manufacture rumours, transmit rumours, and create a mood of panic.”

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