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


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

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