Troubled Baoshang Bank, the first lender seized by Chinese regulators in two decades, to receive 3.6 billion yuan of fresh capital from rival Huishang Bank
- Huishang Bank would become a white knight investor in Baoshang, taking a 15 per cent stake as part of a state-backed rescue package, according to sources
- China’s central bank took control of Baoshang Bank in May last year, making it the first lender to be seized by mainland regulators since 1998
Baoshang Bank, the first mainland Chinese lender to be seized by regulators in two decades, is likely to receive up to 3.6 billion yuan (US$519 million) of fresh capital from a competitor as part of a restructuring aimed at rescuing it from insolvency.
Huishang Bank, based in eastern China’s Anhui province, would become a white-knight investor in Baoshang, taking a stake of no more than 15 per cent after a government-orchestrated overhaul of the troubled lender headquartered in Baotou, Inner Mongolia.
According to two banking sources, Huishang will also take over four branches of Baoshang.
Hong Kong-listed Huishang said in an exchange filing on Tuesday night that it would spend as much as 3.6 billion yuan on a maximum 15 per cent share of a new provincial-level commercial bank, without disclosing the name of the lender.
The sources said the new commercial bank referred to was Baoshang, which was part owned and controlled by the disgraced tycoon Xiao Jianhua.
Neither Huishang nor Baoshang could be reached for comment on Wednesday.
China’s central bank took control of Baoshang Bank in May last year, making it the first lender to be seized by mainland regulators since 1998 when Hainan Development Bank was taken over by the banking authorities.