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May 27, 2019

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Baoshang’s clients to be protected

Source: Xinhua | 00:09 UTC+8 May 27, 2019 | Print Edition

China will protect the legitimate rights and interests of depositors and other clients to the greatest extent after taking over the Inner Mongolia-based Baoshang Bank, an official statement said yesterday.

The country will firmly guard against systemic risks and keep the commercial bank’s businesses uninterrupted, according to the joint statement by the People’s Bank of China and the China Banking and Insurance Regulatory Commission.

Other disposal principles after the takeover include carrying out the takeover in accordance with laws and regulations, guarding against moral hazards and minimizing the cost of disposal.

On Friday, the PBOC and the CBIRC said the joint-equity commercial bank in the Inner Mongolia Autonomous Region would be taken over due to “serious credit risks,” with its businesses entrusted to the China Construction Bank.

Normal operation

“After the takeover, Baoshang Bank has in effect obtained national credit,” the statement said, adding that the principal and interest of personal savings deposits are guaranteed to the full amount, while corporate deposits are also “sufficiently guaranteed.”

“Judging from the situation in the past two days, Baoshang Bank branches have abundant capital and depositors are free to deposit and withdraw,” the statement said.

The PBOC and the CBIRC will maintain the normal operation of the bank by providing liquidity support, allocating sufficient cash and ensuring the smooth operation of the payment system, the statement said.

The PBOC will pay close attention to the liquidity situation of small and medium-sized banks, strengthen market monitoring and comprehensively use various monetary policy tools to maintain reasonable and sufficient liquidity in the banking system and maintain stable money market interest rates.

Both authorities will continue to increase policy support for small and medium-sized banks and promote the further improvement of their corporate governance to make the development of small and medium-sized banks healthier, the statement said.

During the entrusted period, the CCB will help improve Baoshang’s corporate governance structure and risk control system and promote its normal operation and steady development.

The CCB will perform its duties as a trustee bank in accordance with the law, and build a “firewall” against interest conflicts with Baoshang, without grabbing Baoshang’s customer resources or engaging in any improper related-party transactions, the statement said.

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