PBOC: Baoshang Bank takeover 'a standalone case'
The takeover of Baoshang Bank is a standalone case, and authorities have no plans to take similar steps with other financial institutions at present, the People's Bank of China (PBOC) said Sunday.
In an interview published on the PBOC's official website, the central bank confirmed that following the takeover, "all kinds of creditors are fully guaranteed" thanks to funds provided by deposit insurance funds and the PBOC.
Baoshang Bank, based in north China's Inner Mongolia Autonomous Region, was taken over for one year on May 24 because of "serious credit risks," according to a statement by the PBOC and China Banking and Insurance Regulatory Committee.
Regulators have confirmed that all retail depositors' money will be guaranteed following the takeover. /VCG Photo
According to Xinhua, a special team has been established to take over the operation management of the joint-equity commercial bank, while its businesses have been entrusted to China Construction Bank (CCB).
Going into further details on what happened to Baoshang Bank, the PBOC said Sunday that the majority shareholder in the bank, Tomorrow Group, illegally misused a large amount of the bank's funds.
Tomorrow Group held an 89 percent stake in Baoshang Bank, and its misappropriation of the bank's funds forced regulators to step in and take it over.
The PBOC looked to assure creditors that all accounts and debts worth up to 50 million yuan (7.25 million U.S. dollars) would be guaranteed, while principal and interest in excess of that amount would have an average guarantee ratio of "around 90 percent."
In the interview, the PBOC acknowledged that the Baoshang takeover had caused concerns among certain people in the market that "other financial institutions" could be taken over. However, the central bank responded by saying "please rest assured, there is no such plan at present."
If a bank or financial institution needs liquidity support, the PBOC said that "can be carried out in a market-oriented way."
The central bank reiterated its confidence in "resolutely maintaining stability in the financial system," with markets currently generally abundant in liquidity and financial risks generally controllable.