Failed Chinese bank cut loose from PBOC support – going under

Chinese financial regulators took control of Baoshang in May 2019 due to serious credit risks

• The PBOC will now let it go into liquidation, the first such insolvency since 2001.
• PBOC says the bank is permitted to file for bankruptcy and liquidate any remaining assets
• The PBOC has allowed 2 other banks to to take over assets and operations on Baoshang

Via Reuters. 

—

Its a bit of a tricky time for the PBOC to allow this as the sector (the economy as a whole) struggles out of coronavirus impacts. The liquidation of this lender is likely to raise credit costs for similar small banks at the margin and may nudge a few of them closer to a similar fate. 

For bank trade ideas, check out eFX Plus