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Report: Chinese local governments, state firms to take over Baoshang Bank

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Report: Chinese local governments, state firms to take over Baoshang Bank

A group of Chinese state firms and the governments of the Inner Mongolia Autonomous Region and Baotou are set to acquire Baoshang Bank Co. Ltd., Reuters reported Jan. 21, citing a central bank official with direct knowledge of the matter.

The two local governments will lead the acquisition of at least a 50% interest in the restructured lender, the official said. The report after China's central bank said it will strengthen support for troubled banks in 2020 to combat financial risks.

State firms in Inner Mongolia will also participate in the takeover, the central bank official added. Other strategic investors include Huishang Bank Corp. Ltd., China Construction Bank Corp. and a national deposit insurance fund managed by the central bank. Huishang Bank Corp. Ltd. said earlier this month that it will invest 3.6 billion yuan in Baoshang Bank.

In May 2019, Chinese regulators decided to take over the Inner Mongolia-based bank to protect the interests of the bank's depositors and customers in view of severe credit risks.

The Inner Mongolia Autonomous Region and Baotou governments could not be reached for comment, while Baoshang Bank and Huishang Bank declined to comment. China Construction Bank did not reply to a request for comment from Reuters.

As of Jan. 21, US$1 was equivalent to 6.91 Chinese yuan.