China’s Baoshang Bank, whose troubles led to a historic government seizure in May 2019, receives a fresh lifeline with the form of a 3.6 billion yuan capital injection from a rival lender.
Anhui-based Huishang Bank has come to Baoshang’s rescue, taking no more than 15 percent stake in the Inner Mongolia-headquartered lender, according to an «SCMP» report, citing unnamed sources. The Hong Kong-listed Huishang said in an exchange filing, it would make the $519 million stake purchase within the said maximum limits set for a new provincial-leveled commercial bank, though it did not disclose the namer of the lender.
«The refinancing deal shows that regulators’ efforts to revamp Baoshang are in progress, said one of the sources,» the «SCMP» report added, citing an unnamed Shanghai-based banker.
Disgraced Tycoon
Baoshang was seized by the Chinese government last year, marking a historic low and the first time since 1998 (Hainan Development Bank) when such an incident occurred. Following Baoshang, authorities also took over Jinzhou Bank and Hengfeng Bank, whose chairman was recently sentenced to death over corruption charges. Hengfeng also recently received refinancing support from UOB, which said it would put up part of China’s sovereign wealth fund 100 billion yuan ($14.4 billion) injection in December last year.
All three insolvent banks are reportedly controlled by disgraced tycoon Xiao Jianhua, a Canadian-Chinese businessman and founder of conglomerate Tomorrow Group with diversified businesses across finance and resources. He was reportedly abducted in 2017 from a hotel in Hong Kong to mainland China where he is now awaiting trial on charges of bribery and stock market manipulation.
In December last year, UOB said it would join in the refinancing efforts of Shandong-based Hengfeng Bank through part of a 100 billion yuan ($14.4 billion) injection.
