Several private banks hit with record fines for playing quickly and freely with loans


Several private Chinese banks have been fined at unprecedented levels for failing to properly control risks and poor management of how their loans are issued, the Chinese banking regulator has said, as it tightens enforcement. sector monitoring.

Chongqing Fumin Bank Co. Ltd. was fined 8.5 million yuan ($ 1.3 million) by a branch of the China Banking and Insurance Regulatory Commission (CBIRC) in Chongqing Municipality, southwest China ), according to A declaration (link in Chinese) posted on the regulator’s website on September 30. It is the heaviest fine ever imposed by regulators on a private bank.

Fumin Bank has been punished for 17 transgressions that violated the country’s banking laws and regulations, including the failure of its executives to fulfill their online loan management responsibilities, the statement said. The bank has also been accused of illegally outsourcing some essential risk management tasks to its business partners and unfairly pricing transactions with its related parties to provide them with benefits.

In addition to the 8.5 million yuan fine, Bank Chairman Zhang Guoxiang, Chairman Chu Longchun and Vice Chairman Zhong Ziming were sentenced to 500,000 yuan, 300,000 yuan and 200,000 yuan, respectively.

In response to the sanctions, Fumin Bank said it took steps to rectify its business, according to a declaration of September 30 (link in Chinese) posted on the company’s website.

In addition, Shanghai HuaRui Bank Co. Ltd. was fined 5.2 million yuan by the Shanghai branch of the CBIRC, the second highest fine ever imposed on a private bank, according to A declaration (link in Chinese) September 7. The bank has been charged with improper disclosure of information, illegal lending of money to related parties, as well as illegally issuing loans to finance real estate projects.

In addition, the CBIRC branch in Liaoning slapped the face NewUp Bank of Liaoning Co. Ltd. a fine of 1.4 million yuan, the first the bank has ever received, according to a September 17 statement (link in Chinese). Founded in 2017, the bank has been accused of mismanaging major related party transactions, as well as lax approval and management of personal loans.

The sanctions are a sign that China is stepping up its control over private banks. Unlike the country’s long-standing public lenders, private banks were not established until 2014, when the government authorized them as it sought to train a new class of lenders to cater for small and medium-sized businesses in the lender. Internet age.

By the end of June, China had granted 19 licenses to private banks. Major players in the industry include some of the country’s leading online banks, such as WeBank Co. Ltd., whose founders are Tencent Holdings Ltd., and MYbank, operated by Ant Group of Alibaba Group Holding Ltd. Co. Ltd.

Many private banks cooperate with internet platforms to issue loans online – the latter try to attract as many customers as possible in exchange for reduced profits. Some banks also outsourced the entire lending process to these platforms, which led to a vague assessment of borrowers’ creditworthiness and allowed risks to build up in the country’s financial system.

Contact reporter Tang Ziyi ([email protected]) and editor-in-chief Michael Bellart ([email protected])

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