Inner Mongolia-focused lender Baoshang Bank has been reestablished as Mengsheng Bank following a historic government takeover.
The newly established bank includes Hong Kong-listed Huishang Bank amongst its major shareholder (15 percent) behind majority owner People’s Bank of China (27.5 percent), according to exchange filings. This follows the historic seizure of Baoshang Bank in May 2019 – the first government takeover in two decades.
The PBoC has been active in support distressed domestic lenders as China faces a flurry of economic headwinds in recent years including a U.S.-China trade war and the current coronavirus pandemic. The central bank also has a 37.7 percent stake in Jinzhou Bank, another troubled lender seized by the government last year.
One In, One Out
But just as Baoshang’s was reborn as Mengsheng, the next casualty of China’s banking system was reportedly in play. According to a «Caixin» report citing unnamed sources, a state-backed bailout was underway to rescue the Hong Kong-listed Bank of Gansu.
The rescue package would involve capital injections through sale of new equity to existing shareholders, the report said alongside special loans issued by the PBoC and the disposal of up to 10 billion yuan ($1.4 billion) in non-perofming assets with losses borne by the Gansu provincial government.
