The Inner Mongolia-based Baoshang Bank Photo: Baidu

Baoshang Bank, owned by Chinese financier Xiao Jianhua, has been taken over by China’s banking regulators for one year starting from Friday due to “serious credit risks.”

The move to take over the Inner Mongolia-based bank is in line with related laws and set to protect the legitimate rights of depositors and other clients, according to a joint statement by the People’s Bank of China and the China Banking and Insurance Regulatory Commission.

A special team will be set up to take over the operation management of the joint-equity commercial bank in Inner Mongolia Autonomous Region, while its daily operations will be entrusted to China Construction Bank, which is the largest bank in the country.

The bank’s businesses will continue as usual after the takeover, the statement said. Baoshang Bank’s customers can continue to use their ATM cards for banking transactions.

An unnamed spokesperson of the two banking regulators was quoted as saying in a Xinhua report that China Construction Bank was chosen to take over Baoshang Bank as it is currently the largest Bank in China with strong management and good customer services.

Baoshang Bank has been the first Chinese commercial bank taken over by regulators over the past two decades, Sing Tao Daily reported.

The take-over was seen as Beijing’s action to break up the business empire of Xiao, who was reportedly taken away to the China on January 27, 2017 from the Four Seasons Hotel in Central, Hong Kong. Xiao’s family had called the police on January 28 for help but requested to close the case on the following day, local media reported.

Xiao, who held a Canadian passport, is believed to have allegedly involved in bribery and manipulating stock prices. The billionaire’s business empire ran banking, insurance and securities businesses.

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