China’s regulator disclosed a list of 38 financial firm shareholders accused of misusing funds, most of which were connected to the now bailed out Baoshang Bank and Anbang Insurance.
The China Banking and Insurance Regulatory Commission accused the publicly named shareholders of failing to comply with regulations by seeking improper benefits or, in some cases, withdrawing bank or insurer assets illegally.
The regulator stressed the need to maintain financial stability and vowed to increase disclosures to «send a signal that shareholder supervision will be further tightened».
Anbang and Baoshang
Of the 38 shareholders, 10 were linked to the recently bailed out out Baoshang Bank which regulators claim was forced by Tomorrow Group and its controller Xiao Jianhua – now in custody and assisting investigations – to misappropriate loans that led to an unsustainable level of non-performing assets.
Another 10 companies were linked with Chengdu Rural Commercial Bank, controlled by Wu Xiaohui, the former chairman of the once high-flying Anbang Insurance who was sentenced in 2018 to 18 years for fraud, corruption and embezzlement.
China’s financial system has faced increasing challenges amid an ongoing coronavirus pandemic that is seeing a second wave in the mainland with a series of bank bailouts and bank runs that, most recently, led authorities to introduce capital controls and curb cash withdrawals. As of 2019-end, PwC estimated that Chinese banks held $1.5 trillion of bad debt and S&P expects nearly another $500 billion due to the coronavirus outbreak.
