China forms new bank to take over troubled Baoshang Bank

China's central bank said Friday that a new commercial bank will be set up to take over Inner Mongolia-based Baoshang Bank, which has been put under regulatory takeover due to "serious credit risks."

The new bank will acquire all Baoshang Bank's assets, liabilities, businesses and employees within Inner Mongolia Autonomous Region, said Huang Xiaolong, deputy director of financial stability bureau with the People's Bank of China (PBOC), at a press conference.

Baoshang Bank's four branches outside Inner Mongolia will be acquired by Huishang Bank, an Anhui-based commercial bank, according to Huang.

The new bank, to be jointly established by various entities including the Deposit Insurance Fund Management Co., Huishang Bank and finance bureau of Inner Mongolia, will be a city commercial bank and operate businesses only in Inner Mongolia, Huang said.

The establishment of the new bank has been approved by the China Banking and Insurance Regulatory Commission (CBIRC), he said.

The PBOC and CBIRC jointly announced in May that the Baoshang Bank would be taken over for one year because of serious credit risks, and during the takeover, its businesses would be entrusted to China Construction Bank.