The China Banking and Insurance Regulatory Commission (CBIRC) has allowed the troubled Chinese commercial lender Baoshang Bank to file for bankruptcy.

In a statement, the regulator has instructed the bank to report in case of any “major situations”.

Earlier this month, Baoshang Bank said that it was planning to write off a $980m subordinated capital bond after regulators recognised it as insolvent.

This is the first time in two decades that a bank has been given the nod to enter into insolvency proceedings in China.

Back in May last year, China rescued Baoshang Bank as authorities imposed losses on some creditors.

In April 2019, the People’s Bank of China (PBoC), the country’s central bank, said that Huishang Bank and Mengshang Bank will acquire Baoshang Bank’s most of the remaining operations, assets and liabilities.

About CNY170bn ($2.58bn) of public funds, including funds from national deposit insurance fund, was deployed by the central bank to rescue the bank.

In August, the central bank allowed Baoshang Bank to file for bankruptcy.

Baoshang was part of Tomorrow Group, an investment conglomerate led by financier Xiao Jianhua.

As much as CNY220bn ($32bn) were missing in its books due to massive fund misappropriation by its largest shareholder.

In July 2020, the regulators said that they will take over nine financial institutions related to Xiao.