China's Baoshang Bank to be taken over by local govts, state firms (updated)

Huishang Bank

21/01/2020 06:21

(Adds details, background)
    By Rong Ma, Cheng Leng and Ryan Woo
    BEIJING, Jan 21 (Reuters) - China's troubled Baoshang Bank
will be taken over by local governments and a group of state
firms, a central bank official with direct knowledge of the
matter said, as Beijing looks to shore up some of the country's
weakest lenders.
    Financial regulators took control of Inner Mongolia-based
Baoshang Bank last May, citing serious credit risks. That
takeover rattled domestic markets, pushing up interbank funding
costs for some smaller lenders and prompting the central bank to
inject cash into the banking system to prevent contagion risks.
     The governments of China's Inner Mongolia Autonomous Region
and Baotou, a major city in the region, will lead the
acquisition of at least a 50% stake in a reorganised Baoshang
Bank  BAOTO.UL , according to the official, who declined to be
identified given the sensitivity of the matter.
    State firms in Inner Mongolia will also participate in the
takeover, the official said.
    The People's Bank of China (PBOC) said in November that
asset and cap­i­tal ver­i­fi­ca­tion work at Baoshang was nearly
complete, and that it would restructure the lender as soon as
possible.
    Other strategic investors in the revamped Baoshang Bank
include Huishang Bank  3698.HK , China Construction Bank (CCB)
 0939.HK  601939.SS  and a national deposit insurance fund
managed by the central bank, the official said.
    The official did not elaborate on the value of the
investment or specific shareholding details.
    Reuters reported earlier this month that Huishang Bank
planned to take over four branches of Baoshang under a state-led
reorganisation.  urn:newsml:reuters.com:*:nL4N29D279
    Huishang also said recently that it plans to invest up to
3.6 billion yuan ($524.29 million) to hold up to 15% of a newly
created provincial commercial bank, without naming the lender,
although the sources said at the time that the investment was
linked to the Baoshang reorganisation.
    The Inner Mongolia and Baotou governments could not be
reached for comment. Baoshang and Huishang declined to comment.
CCB didn't reply to a Reuters request for comment.
    
($1 = 6.8664 Chinese yuan)

 (Reporting by Rong Ma and Ryan Woo; additional reporting by
Yawen Chen and Zhang Yan; Writing by Cheng Leng; Editing by
Guijuan Qu and Sam Holmes)
 ((tony.munroe@thomsonreuters.com; +86 10 6627 1288; Reuters
Messaging: tony.munroe.thomsonreuters.com@reuters.net))