China Minsheng Bank handed fine in fake wealth management products case
China Banking Regulatory Commission said the case exposed lax internal control and risk management at the Beijing-based lender
China Minsheng Banking Corp has been fined 27.5 million yuan (US$4.2 million) in the fake wealth management products case that exposed lax internal control and risk management at the lender, according to the China Banking Regulatory Commission.
A total of 13 bank employees were fined for selling wealth management products to about 150 affluent retail investors that did not even exist.
Zhang Ying, the former head of the bank’s Hangtianqiao branch in Beijing, was handed a lifetime ban from working in the banking industry.
The regulator also ordered the bank to rectify its wrongdoings, without making it clear how the investors would be compensated.
The bank had said earlier that it would try its best to safely secure the funds and assume legal responsibility.
China Minsheng’s employees had sold the products as an exclusive offering for long-standing private banking customers who had at least 10 million yuan in financial assets.
The investors bought the so-called “innovative” transferred wealth management products from the original investors, according to investment contracts seen earlier by the South China Morning Post.
Bank employees told the buyers that the original investors were in urgent need of cash and were willing to cash out of the investment products which were not yet due and forego the supposed yields. As a result, the original products that guaranteed principal and at least 4.2 per cent annual return “turned into” a product with more than 8 per cent annual return.
In most cases the investors’ ties with the lender go as far back as 10 years when the Hangtianqiao branch sponsored their golfing trips domestically and overseas as incentives for investing in their wealth management products.