Caixin
Jan 26, 2021 08:05 PM
FINANCE

Baoshang Bank Failure Claims Careers of Three More Ex-Regulators

From left to rigth: Chen Zhitao, Song Jianji, Xue Jining
From left to rigth: Chen Zhitao, Song Jianji, Xue Jining

Three retired former banking regulators in North China’s Inner Mongolia autonomous region have been expelled from the Communist Party on suspicion of corruption in connection with Baoshang Bank Co. Ltd., the failed lender undergoing bankruptcy proceedings.

Xue Jining, who was head of the Inner Mongolia branch of the now-defunct China Banking Regulatory Commission (CBRC) from 2007 to 2014 before retiring in 2015, was expelled from the party, according to a statement (link in Chinese) released by the country’s top antigraft watchdog, the Central Commission for Discipline Inspection, on Monday.

Chen Zhitao (link in Chinese), who was a deputy director of the local banking regulator from 2004 to 2011 and retired in 2013, and Song Jianji (link in Chinese), a deputy director from 2004 to 2014 before retiring in 2017, have also been expelled, according to statements released by the watchdog.

The three former officials were accused of taking bribes and taking advantage of their posts to seek benefits for relatives. They were also accused of tolerating, or even promoting, the risky expansion of Baoshang Bank.

Inner Mongolia-based Baoshang, which was 89% owned by private conglomerate Tomorrow Holding Co. Ltd., was placed under state control in May 2019 amid severe credit risks.

The bank was found to have a 220 billion yuan ($33.9 billion) black hole due largely to massive misappropriation by Tomorrow Holding, whose billionaire founder, Xiao Jianhua, was placed under investigation by Chinese anticorruption authorities in early 2017.

The one-year state seizure of the bank — the first in 20 years — was later extended by six months due to the impact of the Covid-19 epidemic. This ended in November 2020, when the bankruptcy proceedings were started.

 Read more  

Cover Story: How China Prevented a Local Bank Crisis From Snowballing

Endemic corruption surrounding the lender was discovered during the state’s takeover.

Liu Jinming and Jia Qizhen, both former officials at the Inner Mongolia branch of the China Banking and Insurance Regulatory Commission — a combination of the CBRC and the country’s former top insurance regulator — were put under investigation by graft busters in 2019. Last year, both were expelled from the party and removed from public office.

Han Wei and Timmy Shen contributed to this report.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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