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The government's takeover of Baoshang Bank is an isolated case, the People's Bank of China said in a statement in response to market concerns about the credit risk level of the domestic banking system.
The credit risk of Baoshang Bank was due to misappropriation of funds by its largest shareholder, which holds an 89% stake in the lender, the statement said.
The shareholder, Tomorrow Group, is an investment group led by billionaire Xiao Jianhua, kidnapped in Hong Kong two years ago. The company is under investigation by the Chinese regulator.
The central bank does not plan to take over other institutions and is confident in maintaining financial stability in the markets.
There was sufficient liquidity in the market as a whole, and the money market interest rate was stable at the end of May.
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