China penalises five lenders in another move to stamp out market misconduct, tame financial risks

Huaxia Bank, China Bohai Bank, Bank of China, China Merchants Bank and The Bank of East Asia’s unit were penalised in latest move

Penalty signals an escalation in efforts to stamp out irregularities and maintain financial stability amid an economic recovery

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The front entrance to the China Banking and Insurance Regulatory Commission in Beijing. Photo: CCTV.com

Published: 7:30pm, 21 May 2021Updated: 7:30pm, 21 May 2021

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.

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

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.