What’s new: China’s seven-year-old deposit insurance fund had a balance of 96 billion yuan ($15.14 billion) as of the end of 2021 and repaid 23.2 billion yuan of finance stability loans, the central bank disclosed Wednesday.
More than 4,000 lenders have bought deposit insurance from the fund and paid 46.7 billion yuan of premiums last year, according to a statement released by the People’s Bank of China. Lenders pay annual premiums at an average rate of 5 yuan for each 10,000 yuan of deposits.
Last year, the fund spent 1 billion yuan to buy a 5% stake in the Bank of Liaoshen, a regional bank in northeastern Liaoning province formed in June by merging several local lenders.
The background: China’s central bank set up the deposit insurance fund in May 2015. It covers commercial banks, rural cooperative banks and rural credit cooperatives. The fund insures deposits of up to 500,000 yuan for each depositor in a bank.
In 2019, the central bank set up a company to manage the fund. The Deposit Insurance Fund Management Co. Ltd., with registered capital of 10 billion yuan, was established on the same day regulators took the rare move of seizing Inner Mongolia-based Baoshang Bank. Since then, the fund has injected capital into Mengshang Bank, set up to take over Baoshang, and became the bank’s largest shareholder.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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