#FinancialNews: China penalises five lenders in a move to stamp out misconduct
China has penalised five of the nation’s lenders in yet another warning shot to the industry to stamp out misconduct and tame financial-market risks to strengthen an economic recovery.
The China Banking and Insurance Regulatory Commission (CBIRC) fined the lenders 366 million yuan ($56.8 million) in total for breaking a myriad of rules and regulations, it said in a statement on Friday. It also vowed to step up the pressure to maintain financial stability.
The move signaled an escalation in the state’s enforcement actions following a series of measures across various industries over the past six months. Among others, authorities fined five lenders in September for irregularities, handed Alibaba Group Holding (the owner of this newspaper) a record fine in April, started a probe into food-delivery platform operator Meituan on its market practices and recently took steps to clamp down on pump-and-dump stock market manipulation.
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In Friday’s announcement, Huaxia Bank was fined 98.3 million yuan for failure to comply with disclosure on its wealth management products and inadequate warning to clients about potential risk of the investment products.
Locals walk past a Huaxia Bank in Shanghai. The lender has been fined twice in eight months for irregularities. Photo: Reuters alt=Locals walk past a Huaxia Bank in Shanghai. The lender has been fined twice in eight months for irregularities. Photo: Reuters
China Bohai Bank was fined 97.2 million yuan for selling wealth management products under assembled trust fund plans to unqualified customers, as well as improper management of bank acceptance bills. Bank of China, China Merchants Bank and The Bank of East Asia’s China branch were also taken to task and penalised, according to the statement.
“The CBIRC will maintain high pressure on violation of laws and regulations,” the regulator said, adding that it will keep clamping down on irregularities within the financial sector that could hurt the real economy.
The CBIRC earlier fined five other lenders – namely China Minsheng Bank, China Zheshang Bank, Huaxia Bank, Guangfa Bank and China Huarong Asset Management – a combined 320 million yuan in September for market irregularities.
At last month’s Politburo meeting headed by President Xi Jinping, the political leadership exhorted its agencies to tackle economic flaws, including uneven growth, deep-seated financial risks and technological challenges, to entrench the nation’s post-coronavirus economic recovery.
The meeting stressed the importance of further regulation of internet-platform companies, continued crackdown on property market speculation, and protection for the nation’s limited arable land, among others.
China, the world’s second-biggest economy, reported a record 18.3 per cent increase in gross domestic product in the first quarter, compared with a low-base a year earlier when output was decimated with factory closures at the outset of Covid-19 pandemic. The economy grew 2.3 per cent in 2020, the slowest in 45 years.
Authorities have been on high alert for rising domestic financial risks while closely watching external uncertainties, including the spillover side effects of foreign economic policies, supply chain disruptions and other moves to contain its technological advancement.
The government is also entrusted local Communist Party and government officials to oversee a bad-debt disposal mechanism to better deal with financial risks, such as poor liquidity among the nation’s smaller banks and mounting debt repayment pressures facing local governments.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.
