Takeaways from the Baoshang Bank takeover

The first regulatory takeover of a Chinese bank in more than two decades is a reminder that the balance sheets of many regional lenders are far less healthy than they claim. China’s interbank market mostly shrugged off the move since it reinforced the assumption that the state will always step in to bail out struggling banks. But with many more banks likely to run into problems in future, there is no guarantee that the resolution will always be this smooth.