China’s banking regulator has slapped fines of more than 150 million yuan (US$22 million) on six banks for breaching regulations on wealth management products and lending amid an intensified crackdown on financial risks and malpractices.
The China Banking and Insurance Regulatory Commission imposed the fines in November for violations ranging from investing funds gathered from wealth management products in property projects to misleading advertising, according to statements published by the watchdog on Friday.
The six banks include the country’s fifth-largest lender Bank of Communications, which was penalised 7.4 million yuan, China Citic Bank 22.8 million yuan and China Zheshang Bank 55.5 million yuan.
Two employees of China Minsheng Bank were also penalised because they were responsible for “serious violation of prudent principles in lending”, the statement said.
This was one of the largest penalties handed out this year by the regulator, which has increasingly tightened its oversight on the US$40 trillion banking sector since 2016, when China made tackling financial risks one of its top priorities.
The banking regulator and its local branches across China issued 800 fines on banks and individuals in the third quarter of this year, rising by a third from the second quarter, according to the official Economic Information Daily run by state news agency Xinhua.
China has also been making efforts to address the mounting debt and risks in the multi-trillion-dollar unregulated shadow banking system, which exists in the form of asset management products and trust loans that are off the banks’ balance sheets.
In July, the banking and insurance regulator released a new set of rules and guidelines to step up supervision on financial institutions’ business in wealth management and asset management.
Beijing also set up the Financial Stability and Development Committee, a task force led by China’s economic mastermind and Vice-Premier Liu He, last year to supervise the country’s monetary policy and financial regulation.
Author: Yujing Liu