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Since May, China has faced a nationwide confidence crisis in small financial institutions after regulators took over Baoshang Bank, dubbing it a “severe credit risk.” It was the first time in 20 years that Chinese authorities had directly assumed control of a private lender.
Baoshang was controlled by Tomorrow Holding Co. Ltd., a conglomerate whose billionaire founder Xiao Jianhua is the subject of a graft investigation by Chinese authorities and has not appeared in public since January 2017.
Regulators must have known long before the takeover that Tomorrow Holding’s sprawling empire illegally controlled a large number of financial institutions, but likely failed to act in a timely manner due to a lack of accountability mechanism, writes Ling Huawei, managing editor of Caixin Media and Caixin Weekly, in an article for the latter publication.
Contact reporter Tang Ziyi (email@example.com)