The government takeover of Baoshang Bank is an isolated case, the People’s Bank of China said in a statement in response to market concerns over credit risk level in the domestic banking system.
The credit risk of Baoshang Bank was due to misappropriation of funds by its largest shareholder which holds an 89% stake in the lender, the statement said.
The shareholder, Tomorrow Group, is an investment group led by billionaire Xiao Jianhua, who was abducted in Hong Kong two years ago. The company is under investigation by the Chinese regulator.
The central bank doesn’t have plans to take over other institutions and said it’s confident in maintaining financial stability in markets.
There’s sufficient liquidity in the market overall, it said, and the money market interest rate was stable as of the end of May.