China’s central bank and banking regulator have taken over control of a commercial lender linked to disgraced financier Xiao Jianhua, as the authorities take a step forward in breaking up his sprawling business empire. The management of Baoshang Bank, based in Inner Mongolia’s Baotou city, was taken over by the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) with immediate effect for a year to contain its credit risk, according to a Friday statement by the two regulators. 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. Baoshang is a key piece in Xiao’s business empire, 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 . A plan by Chinese authorities to divest about 150 billion yuan (US$23.9 billion) worth of assets in 2018 to repay loans ran into difficulties after the group and potential buyers disagreed on the prices of key assets, according to public corporate filings and sources close to those deals. Baoshang is a closely held bank, whose shares are not listed on any exchange. Established in 1998 as Baotou Commercial Bank, it was renamed in 2007. The bank has a network of 291 outlets with more than 8,000 employees on staff, according to its website. The bank had total assets of 418.3 billion yuan (US$60.6 billion) at the end of 2016 and a loan balance of 144.8 billion yuan. It is also highly indebted, owing 156.5 billion yuan of outstanding loans at the end of 2016, a 65 per cent jump from the end of 2014, according to the bank’s website. Its non-performing loan ratio was at 1.7 per cent as of December 2016. The bank had not published its annual reports for 2017 and 2018. The state takeover of a privately owned bank, the first in nearly two decades, followed the crackdown since 2016 on aggressive wheeling and dealing in China’s financial industry. In April 2017, the authorities put several asset buyers – Anbang Group, the Dalian Wanda Group, and the HNA Group – on notice to pare back their leveraged asset acquisitions . All three groups had been selling their assets since, with HNA shedding nearly US$40 billion in assets , while Wanda sold US$25 billion of assets. Anbang’s chairman Wu Xiaohui was subsequently charged last year with embezzlement and sentenced to 18 years in jail , while the newly merged CBIRC – a combination of the former banking and insurance regulators – took over Anbang’s management. With additional reporting by Zhou Xin in Hong Kong.