China’s antitrust watchdog fines Citic Bank, Baidu unit for failing to report digital bank venture
- Citic Bank and a unit of tech giant Baidu were fined US$78,280 yuan each for violating anti-monopoly law
- China’s antitrust watchdog fines Citic AiBank because the joint venture partners failed to disclose the formation in 2015
China’s antitrust regulator has expanded its anti-monopoly crackdown to the banking sector, penalising the two shareholders of a digital bank 500,000 yuan (US$78,280) each for failing to report their joint venture ahead of its formation in 2015.
The State Administration for Market Regulation (SAMR) said on its website on the weekend that China Citic Bank and Fujian Baidu Bo Rui Netcom, which own 70 per cent and 30 per cent, respectively, of Citic AiBank, had violated the country’s anti-monopoly law. Fujian Baidu is controlled by Baidu, operator of mainland China’s dominant internet search engine.
AiBank, known for its use of artificial intelligence in delivering banking services thanks to its AI-focused shareholder Baidu, was launched in 2017.
SAMR said the fine was the result of an investigation that started in August, but added that AiBank did not restrict or exclude competition in any way.
While the fine is small, it signifies the regulator’s determination to deter banking players cutting corners on compliance, said Wang Feng, chairman of Shanghai-based financial services provider Ye Lang Capital.
“Compliance and risk management will be the top priorities for banks and financial institutions in China over the next three to five years as the central government is adamant in weeding out irregularities in the industry,” Feng said. “It sends a clear message that the regulators will take a harsh stance on unlawful practices to ensure justice and fairness in the market.”
Both Fujian Baidu and China Citic Bank can apply to SAMR to appeal against the fine within 60 days of the decision. They can also challenge the decision in courts within six months.
However, SAMR said on its website that the case is considered closed and its decision will be enforced.
China Citic Bank and Fujian Baidu did not reply to requests for comment on Tuesday.
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