Caixin
Mar 10, 2021 07:27 AM
FINANCE

Beijing Court Finalizes Baoshang Bank Liquidation

What’s new: A court in Beijing finalized the bankruptcy liquidation of Inner Mongolia-based Baoshang Bank, ending a nearly two-year effort to clean up the embattled regional lender that became China’s first failed bank in decades.

The Beijing No.1 Intermediate People’s Court issued its ruling on Baoshang’s liquidation Feb. 7, taking effect immediately, the verdict released Tuesday showed.

According to the court document, Baoshang had total assets of 447 million yuan ($68 million) as of the end of October 2020, with net liabilities of about 206 billion yuan, meaning it was insolvent. Baoshang had no actual business and employees as the bankruptcy proceeding started, and none of its creditors demanded restructuring, the court said.

The background: Baoshang filed for bankruptcy proceedings in November 2020, after a nearly two-year struggle with a credit crisis. The bank was China’s first commercial lender to be liquidated through judicial procedure.

Baoshang, which was 89% owned by private conglomerate Tomorrow Holding Co. Ltd., was taken under state custody in May 2019. The bank was found to have a massive financial black hole due to relentless fund misappropriation by its largest shareholder.

Under a government-led shakeup, parts of Baoshang’s good assets were taken over by newly formed Mengshang Bank and Hong Kong-listed Huishang Bank. State investors including a national deposit insurance fund managed by the central bank and the government of the Inner Mongolia autonomous region took part in the restructuring.

Quick Takes are condensed versions of China-related stories for fast news you can use.

Related: Five Things to Know About China’s First Bank Failure in Decades

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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