On May 21, the mainland CBRC announced 11 fines at once, penalizing five banks with a combined amount of about RMB 366 million. The notices showed that wealth management and real estate-related businesses were the hardest hit by these banks’ violations.
The five banks include Huaxia Bank, Bohai Bank, Bank of China, China Merchants Bank, and Bank of East Asia (China).
According to the report, Huaxia Bank was involved in a number of violations including: non-compliance with information disclosure of some wealth management products and using wealth management funds to dock the Bank’s credit assets, issuing a list of wealth management investments that did not match the facts or did not fully reflect the true risks. A fine of 98.3 million yuan (RMB, same below) was imposed, one of the responsible persons was warned and fined 50,000 yuan, and the other responsible person was warned.
Bohai Bank: financial products invested in equity assets and pooled fund trust plans were sold to general individual customers, and the management of banker’s acceptances margin was not regulated. A fine of 97.2 million yuan was imposed, and two responsible persons were warned and fined 50,000 yuan each.
Bank of China: Illegal issuance of M&A loans, illegal collection of annual fees from some customers who had signed up for payroll, etc. Confiscated the illegal income and imposed a total fine of RMB87,613,550,000, and warned one responsible person.
China Merchants Bank: Inadequate management of the consolidated statement, illegal disguised lowering of the sales threshold of wealth management products through internal transactions of affiliated non-banking institutions, illegal investment of interbank investment and wealth management funds in real estate projects with incomplete land premiums or “four certificates”, etc. A fine of 71.7 million yuan was imposed, and a warning was issued to a responsible person.
BEA China: Loans to real estate development enterprises were not recorded in the real estate development loans account, and the scale was transferred using the “sell-off + buy-back + buy-out at maturity” transaction model. A fine of 11.2 million yuan was imposed.
A day earlier, the CBRC just informed that in 2020, the system made 6,581 administrative punishment decisions, punishing 3,178 banks and insurance institutions, with fines totaling 2.275 billion yuan (2.156 billion yuan for institutions and 118 million yuan for individuals). This shows that the high pressure of the Chinese Communist Party authorities on the financial sector rectification trend is not reduced.
In recent years, the mainland’s financial chaos has continued, with banks’ profits declining and the situation of non-performing loans and bad debts deteriorating. The Internet financial platforms, which had been heavily fostered and used by the Chinese government at all levels to raise capital, have burst into flames and gone to zero, leaving many investors and ordinary people with no money back. The victims have no way to complain, but also by the authorities “financial stability”, resulting in numerous tragedies.
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