Baoshang Bank takeover connected to misappropriation of funds but was an isolated case, China’s central bank says
- People’s Bank of China says an investment conglomerate led by financier Xiao Jianhua misappropriated bank funds
- PBOC does not have plans to take over other institutions and says it is confident financial markets will remain stable
China’s central bank said the government takeover of Baoshang Bank Co. was an isolated case, while revealing the seizure was triggered by misappropriation of funds by its largest shareholder.
The People’s Bank of China said on Sunday that it does not have plans to take over other institutions and that it’s confident in maintaining financial stability in markets, according to a statement released on its website.
Tomorrow Group, an investment conglomerate led by financier Xiao Jianhua, holds about an 89 per cent stake in Baoshang Bank, according to the statement. It misappropriated a large amount of the bank’s funds, triggering serious credit risks and prompting the government to step in.
The conglomerate is being probed by Chinese officials, according to people familiar with the investigation.
The May 24 announcement that the PBOC and China Banking and Insurance Regulatory Commission would assume control of Inner-Mongolia-based Baoshang Bank for one year surprised China watchers.
