Chinese bank shares rise on Beijing’s reiteration to weed out irregularities
The mainland banking regulator has fined two major lenders more than US$19m in two months
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.
The exposure of irregularities would roll on in the future
Over the weekend, the Postal Savings Bank of China, the nation’s largest lender in terms of network, was slapped a 90.5 million yuan (US$14.2 million) fine for illegal bank notes transactions worth 7.9 billion yuan, the second big-ticket fine in two months. The bank along with 11 other lenders involved in the scam were fined a combined 295 million yuan.
A bank bill, also known as note, is issued by a bank promising to pay a specific sum to the bearer on demand. The bearer may cash the bill with another bank but at a discount. Notes can be traded on the interbank market as well as on the grey note market.
President Xi Jinping has made tackling financial risks one of three top priorities for Chinese cadres over the coming years, along with environmental management and poverty alleviation.
Earlier this month, the CBRC fined the Heilongjiang branch of Industrial and Commercial Bank of China, the nation’s largest bank by assets, 34 million yuan for irregularities in its wealth management business. Officials at the Heilongjiang bureau of the CBRC were also punished during the case.
