Chinese bank shares rise on Beijing’s reiteration to weed out irregularities

Shares of mainland Chinese banks rose in morning trading in Hong Kong on Monday as Beijing clenched an iron fist to clean up irregularities to shore up lenders' corporate governance.

The Industrial and Commercial Bank of China gained 1.36 per cent to close at HK$7.44, China Construction Bank rose 0.8 per cent to HK$9.12, while Postal Savings Bank of China surged 5 per cent to HK$5.22. The Hang Seng Index ended at 32,966.89, or down 0.56 per cent.

Guo Shuqing, chairman of the China Banking Regulatory Commission, has signalled tight scrutiny of the banking industry, stressing of the regulator’s key tasks that include warding off major financial risks and rectifying wrongdoings, according to a statement posted on the banking watchdog’s website on Saturday.

The CBRC will punish and fine every wrongdoing severely, it said.

Xu Wenbin, chief banking analyst at Bank of Communications in Shanghai, said the increased scrutiny would improve industry’s well being by exposing irregularities, trimming risks, and raising transparency among the lenders.

“Regulators are showing a firm hand to rule out irregularities within banks against a broad de-leverage drive and campaign to ward off financial risks,” said Xu. “The exposure of irregularities would roll on in the future.”