Tomorrow Group, the conglomerate founded by Chinese financier Xiao Jianhua, has transferred its holdings in more than 10 financial institutions to new shareholders, part of a slimming exercise ordered by the government to pare debt, according to the bank regulator. The company, based in Inner Mongolia’s Baotou city, has shed its stakes in more than 10 entities including Bank of Weifang and Taian in Shandong province, and Zhongjiang Trust in Jiangxi province, the China Banking and Regulatory Commission (CBIRC) said. Hong Kong-listed Harbin Bank, where Tomorrow Group also owns shares, is operating normally and has disclosed its financial results, the regulator said. “Under efforts by all parties, Tomorrow Group has adjusted its structure, slimmed down and transformed,” the CBIRC said in its latest statement, citing an unidentified spokesperson, without divulging the identities of the new shareholders. The statement, issued more than two weeks after the CBIRC and the People’s Bank of China nationalised Baoshang Bank – a key part of Xiao’s financial conglomerate – offered a rare peek at the state-sanctioned dismemberment of Tomorrow Group, which holds stakes in hundreds of Chinese listed companies via proxies, spanning energy, financial services, technology and real estate, among a myriad of industries. The Chinese authorities have been trying to carve up his business interests ever since Xiao left Hong Kong in January 2017 on the eve of the Lunar New Year for mainland China , where he is believed to be helping with one of the biggest investigations into deal making. Xiao has not been seen in public since, and is awaiting trial on charges of bribery and manipulating stock prices . The CBIRC and the PBOC took over the operations of Baoshang Bank for two years, according to their May 24 order. China Construction Bank, one of the country’s biggest state-owned lenders, was entrusted with taking over Baoshang’s daily banking operations to protect the interests of depositors and customers after control of its management was assumed by the regulators, according to the statement. “All kinds of businesses are operating as normal since Baoshang Bank was taken over, with … sufficient liquidity overall,” the CBIRC said, without disclosing any financial details of the transfer of Tomorrow Group’s stakes. “The next step will be to kick-start the work to verify the assets and capital [of the bank] at the appropriate time after we ensure its normal and steady operation.” The takeover of Baoshang, the first nationalisation of a financial institution by the Chinese state since 1998, caused jitters among investors about the health of China’s banks , especially among the small, regional and city-owned banks. The move was “credit negative for large wholesale creditors,” Moody’s Investors Service senior analyst Yulia Wan said in an emailed commentary on May 29. “The Baoshang case could set a precedent for future resolution of other Chinese banks that are assessed to be at risk,” she wrote, pointing out that 426 of China’s 3,800 financial institutions were put in the “high risk” class by the central bank’s 2018 Financial Stability Report . Still, the CBIRC sought to dispel such concerns. “A minority of small-to-medium sized banks did not disclose the annual reports on time, which are isolated cases,” the regulator said. “The banks related are in shareholding restructure, preparing for listing or changed the auditor, so the workload was large and they could not finish the auditing work on time. These have been reported to the regulatory department, which will urge them to speed up.” A total of 18 commercial banks have failed to publish their annual reports by the April 30 deadline. Separately, the spokesman said the commission is considering entitling insurance companies higher autonomy in investment given prudent regulation for better long-term and value investment of insurance funds. .