Beijing needs to pick a bank bailout message

Bank of Jinzhou Co

05/06/2019 03:44

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Christopher Beddor
    HONG KONG, June 5 (Reuters Breakingviews) - Regulators
downplayed their decision to take over troubled Baoshang Bank,
just as another small lender with over $100 bln in assets said
auditor EY quit. Officials can rescue banks, or not, but history
shows they need to be clear about their reasoning when markets
are anxious.
    Full view will be published shortly.
    On Twitter https://twitter.com/cbeddor
    
    CONTEXT NEWS
    - Ernst & Young resigned as auditor for Bank of Jinzhou, the
Chinese lender said in a stock exchange filing on May 31.
According to the notice, EY said there were indications that the
use of proceeds of certain loans to the bank’s institutional
clients were inconsistent with their stated purpose in
documentation. EY was unable to complete audit procedures for
the bank’s 2018 annual results.  
    - Trading of Bank of Jinzhou’s Hong Kong-listed shares has
been suspended since April 1, pending the publication of its
2018 annual results.
    - The People’s Bank of China said on June 2 that a
government takeover of Baoshang Bank on May 24 was an isolated
case, and that it would take steps to stabilise money markets. 
    -  For previous columns by the author, Reuters customers can
click on  BEDDOR/ 
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Bank of Jinzhou filing    http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0531/LTN201905311404.pdf
People’s Bank of China release (Chinese)    http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3838479/index.html
China central bank urges calm after Baoshang takeover   
 urn:newsml:reuters.com:*:nL4N2390BM
BREAKINGVIEWS- China’s small bank bailouts duck bankruptcy test 
   urn:newsml:reuters.com:*:nL4N2330KH
BREAKINGVIEWS- China loses leverage in battle against debt   
 urn:newsml:reuters.com:*:nL3N22I129
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Editing by Pete Sweeney and Katrina Hamlin)
 ((christopher.beddor@thomsonreuters.com; Reuters Messaging:
christopher.beddor.thomsonreuters.com@reuters.net))