>> The Chinese government on Friday seized control of Anbang Insurance Group, the private company that owns New York's landmark Waldorf-Astoria Hotel. A dramatic move that highlights Beijing's willingness to curtail deal hungry conglomerates. Authorities said Anbang had violated laws and regulations which quote, may seriously endanger the solvency of the company.
Reuters' Shanghai Bureau Chief, John Ruwitch explains.>> It does underscore the government's commitment and the lengths to which the government is willing to go in its de-risking campaign. Its campaign to bring down debt levels and lower risk in the financial sector. It also sends a shot across the bow of other acquisitive and risk-taking private enterprises, that the government's there.
The government can take this type of a step if you go too far out of line.>> The China Insurance Regulatory Commission or the CIRC also said that Anbang's chairman and key share holder, Wu Xioahui, had been prosecuted for economic crimes. Wu was arrested in June last year, as troubles mounted for one of China's most aggressive buyers of overseas assets.
>> Anbang's one of a few giant conglomerates in China that really dropped tons of money in foreign countries on foreign assets over the years. It spent nearly $30 billion, more than $30 billion in fact, on assets around the globe, including the Waldorf-Astoria Hotel. Some of these assets are in the insurance sector, of course, and it remains to be seen if insurance regulators in countries like South Korea or countries in Europe, where it has assets, are going to have an opinion about the Chinese government taking control of this company.
>> During the government takeover of Anbang Group, which will last for one year, the company will be managed by a group of officials from the CIRC, the Central Bank and other key financial regulators.>> The government has pledged a restructuring of the company, they're gonna bring in outside capital.
It's possible that that will dilute the shareholdings of current shareholders who really have no recourse. And that's one of the big question marks.>> Experts say with this unprecedented seizure, the Communist Party wants ambitious private companies to know that the Chinese government is in charge.