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