China seizes financial firms linked to probed conglomerates

This is a part of a crackdown on conglomerate-posed systemic risks.

Chinese regulators have seized control of financial firms tied to a holding company which has been targeted in a government crackdown on systemic risks brought by conglomerates, reports Reuters.

Most of the small and mid-sized firms seized have ownership links to Tomorrow Holdings, whose chairman Xiao Jianhua was investigated more than three years ago and has not been seen since 2017.

The takeovers are effective for one year, regulators said.

The announcements by China’s securities watchdog and its Banking and Insurance Regulatory Commission (CBIRC) came a day after the country’s state assets regulator vowed to tighten scrutiny on high-risk areas such as finance and real estate in a bid to forestall systemic challenges.

In a previous takeover case involving Tomorrow, the central bank said the systemic risk posed by the group involved excessive borrowing and misuse of funds from the financial firms it owned.

Here's more from Reuters.