China tightens ownership rules of unlisted banks

The move comes after the takeover of Baoshang Bank.

Reuters reports that the China Banking and Insurance Regulatory Commission (CBIRC) has revised the guildeines for unlisted commercial banks as part of an intensified crackdown on financial risk following the state takeover of a regional lender.

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The regulator is now requiring unlisted commercial banks to register their stakeholders with qualified custodians by end-June 2020, and all commercial banks to identify their shareholders by the end of 2021.

Previously, only banks listed in the main stock market and over-the-counter market needed to register their stakeholders with custodian institutions such as regional equity exchanges.

In May, regulators announced that they are taking over regional Mongolia-based lender Baoshang Bank after identifying 'serious credit risks' in its operations in what marks the first government takeover of a bank in more than two decades. 

Fitch Ratings notes that there are almost 4,000 small city and rural banks in China which typically have more vulnerable funding and liquidity profiles, larger shadow-financing activities and lower loss-absorption capacity than state banks and larger commercial banks.

Here's more from Reuters: