I. What are the disposal principles after the takeover of Baoshang Bank (BSB)?
First, we will take over BSB in accordance with laws and regulations. Second, we will resolutely guard against systemic risks, protect the legitimate rights and interests of depositors and other clients to the greatest extent possible, and make sure the business operation of BSB is not suspended. Third, we will prevent moral hazards and fulfill responsibilities based on specific circumstances. Fourth, we will minimize the cost of disposal.
II. How will the safety of clients’ deposits differ from the days before the takeover?
The BSB is taken over due to its serious credit risks. After the takeover, it has in effect obtained national credit. The principal and interest of savings deposits are guaranteed to the full amount, and corporate deposits are also sufficiently guaranteed. Judging from the situation in the past two days, BSB branches have abundant capital, and depositors are free to deposit and withdraw, without causing any chaos.
III. How will you guarantee personal savings deposits made before the takeover?
After the takeover, the principal and interest of personal deposits before the takeover will be guaranteed to the full amount by the People’s Bank of China (PBC), the China Banking and Insurance Regulatory Commission (CBIRC), and Deposit Insurance Fund. We will maintain normal business operation of the bank.
IV. How will you guarantee corporate deposits and interbank liabilities made before the takeover?
We will guarantee all principal and interest of corporate deposits and interbank liabilities worth less than RMB50 million (including RMB50 million) to the full amount. As to those above RMB50 million, equal negotiations will be conducted between the special working group and creditors, so as to provide guarantee in a law-based manner.
After the takeover, the principal and interest of corporate deposits and interbank liabilities qualified for the aforementioned guarantee policy will be guaranteed to the full amount by the PBC, the CBIRC, and Deposit Insurance Fund. The normal business operation of the bank will not be affected.
V. How will you guarantee new deposits and other liabilities after the takeover?
After the takeover, the principal and interest of new personal deposits, corporate deposits, and interbank borrowings will be guaranteed to the full amount by the PBC, the CBIRC, and Deposit Insurance Funds. The normal business operation of the bank will not be affected.
VI. Will the business of BSB’s village and township banks be affected after the takeover?
The village and township banks established under the initiative of BSB are independent legal-person entities, so they will continue to run business independently after the takeover. The special working group will play a dominant role in undertaking the responsibility of BSB as the main initiator, so as to provide stronger guarantee for the normal operation of these village and township banks.
VII. Will the takeover generate greater liquidity pressure on the banking system?
After the takeover, the PBC and the CBIRC will provide liquidity support, allocate sufficient cash in a timely manner, and ensure the smooth operation of the payment system, so as to maintain the normal operation of BSB. The PBC will pay attention to the liquidity situation of small and medium-sized banks, strengthen market monitoring, and use various monetary policy tools, such as open market operation, to maintain reasonably sufficient liquidity in the banking system and keep money market interest rates stable.
VIII. Is China’s banking sector, particularly small and medium-sized banks, sound?
Since the beginning of the year, China’s macro-economic performance has generally remained stable and outperformed expectations. The supply-side structural reform has been deepened and economic resilience strengthened. With macro leverage ratios remaining stable and financial risks tending to be restrained, a virtuous economic and financial circle has been achieved. Large banks have been operating steadily, and small and medium-sized banks have secured substantial progress in operation management. In promoting the supply-side structural reform, the PBC and the CBIRC will continue to increase policy support for small and medium-sized banks and promote further improvement of their corporate governance to make their development healthier.
IX. What role will China Construction Bank (CCB), the trustee bank, play in the takeover?
The CCB will conduct broad-based cooperation with BSB in accordance with the principles of marketization and rule of law, by capitalizing on its robust business operation philosophy, long-term rich management experience, and advanced Fintech offerings as a large state-owned bank. It is going to play a positive role in enhancing customer experience, strengthening internal management, protecting the legitimate rights and interests of consumers, and optimizing IT structure and functions. During the entrusted period, the CCB will help improve the bank’s corporate governance structure and risk control system, and promote its normal operation and sound development to create more value for the bank. The CCB will perform its duties as a trustee bank in accordance with laws and regulations in a fair manner, and build a “firewall” against interest conflicts with the BSB, without grabbing its customer resources or engaging in any improper related-party transactions.