China's central bank said on Thursday it had approved business operations of Mengshang Bank to take over the assets and operations of Baoshang Bank.
Chinese financial regulators took control of Baoshang in May last year citing "serious" credit risks, and have since pushed forward the restructuring plans of the lender.
Baoshang's assets, liabilities and operations within the Inner Mongolia region will be taken over by Mengshang, while its four branches outside the region will be taken over by Huishang Bank, the central bank said in a online statement.
The government of China's Inner Mongolia Autonomous Region and several state-owned firms in Baotou, a major city in the region, will lead the acquisition of about 52.5% of Mengshang Bank, Baoshang Bank revealed in a synchronized statement on Thursday.
The Anhui-based Huishang Bank will take a 15% stake of Mengshang, while a national deposit insurance fund managed by the central bank will assume 27.5%.
Huishang said in February it would take over assets and business worth 106.5 billion yuan ($15.11 billion) of Baoshang's Beijing, Shenzhen, Chengdu and Ningbo branches, and planned to raise up to 20 billion yuan from bonds to keep its liquidity healthy after the takeover.
"Mengshang will fully leverage the management experience of state-owned lender and listed lender to serve local customers and focus on business in Inner Mongolia," Baoshang's statement said.
Baoshang's over-expanded business footprints and risky investment outside the Inner Mongolia region were blamed by the regulators for the bank's misuse of funds and loans.
Qiao Junfeng, ex-vice president of China Construction Bank's (CCB) Inner Mongolia branch, was named as president of Mengshang Bank, while Yang Xianfeng, another veteran banker who used to work for CCB, was named Mengshang's chairman, according to the central bank.
CCB was entrusted by the financial regulators to handle the business operations of Baoshang after their takeover in May last year.
The registration capital of the new Mengshang Bank is 20 billion yuan, according to a separate Thursday statement released by the central bank.
All wealth management products sold to retail and inter-bank investors by Baoshang will be taken over by the revamped Mengshang, the central bank added.
(Reporting by Cheng Leng, Yawen Chen and Se Young Lee; Editing by Mark Heinrich)