Everbright Bank says nepotism played no role in JPMorgan hire
China Everbright Bank’s decision to hire JPMorgan Chase to underwrite its initial public offering in Hong Kong was not linked to the US bank hiring the son of a high-level executive linked to the Chinese firm, a spokesman for the Chinese bank told state media.
The official China Securities Journal on Tuesday cited an unnamed “person in charge” at Everbright Bank saying the process of hiring JPMorgan was “open and transparent, and there was no so-called issue of passing favours”.
Everbright Bank could not be immediately reached for comment.
US authorities have opened an investigation into whether the Wall Street investment bank hired the children of powerful Chinese officials to help it win business in China, a person familiar with the matter said on Monday.
The New York Times reported on Saturday that JPMorgan had hired Tang Xiaoning, the son of a former Chinese banking regulator who is now the chairman of China Everbright Group, the state-controlled parent of Everbright Bank.
After Tang joined JPMorgan, the US bank secured several important assignments from the Chinese conglomerate, including advising its subsidiary, Everbright Bank, on a stock offering, the Times reported.
US law does not stop companies from hiring politically well-connected executives. But hiring people in order to win business from relatives can be bribery, and the Securities and Exchange Commission is investigating JPMorgan’s actions under the US Foreign Corrupt Practices Act.
Lawyers in Hong Kong said the probe has sent a chill wind through the sector, as rival banks scramble to review their own records in a market where ties to political and business leaders can be key to winning big deals.
Everbright Bank has been struggling to complete its Hong Kong IPO. It shelved plans to float shares there in 2011 and last year and is now eyeing a third attempt in September this year.
Everbright Bank chose JPMorgan as one among nine underwriters from a shortlist of 20 Chinese and foreign firms, the paper reported the spokesman as saying. Others chosen included Morgan Stanley, UBS, China International Capital Corp and BOC International.