China hints at future bank resolution framework

Baoshang Bank collapse offers clues to how government intends to resolve tomorrow’s failing banks

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Risk.net montage/Wikicommons-Bjoertvedt

The seizure and mandatory unwinding of one of China’s most toxic lenders could ultimately lay the foundation for the nation’s bank recovery and resolution framework, practitioners and analysts say.

While Chinese authorities have demonstrated an unusual level of transparency in the rescue of Baoshang Bank, market participants say regulators should also use the opportunity to provide clarity on areas such as ending the reliance on government bailouts and the fate of debtholders.

“People are

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