Why were many banks fined?
2024-08-18
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On August 16, the official website of the Zhejiang Regulatory Bureau of the State Financial Supervision and Administration disclosed a number of fines in succession, targeting a number of financial institutions in Zhejiang Province.
Administrative penalty information shows that many institutions and relevant responsible persons, including MyBank, Hangzhou Bank Wealth Management, Zhejiang Xiaoshan Rural Commercial Bank, Ningbo Bank, Zhejiang Branch of the Export-Import Bank of China, etc., were fined for a number of violations, including "failure to disclose major changes in corporate governance in a timely manner", "imprudent management of working capital loans, funds being diverted to the stock market", and "asset transfer prices between wealth management products deviating from fair value", with a total amount of fines and confiscations exceeding 15 million yuan.
In response to this penalty, MyBank, which was fined 7.35 million yuan, immediately told the Securities Times and China Securities Journal reporters that it sincerely accepted the penalty and had basically completed the rectification.
MyBank fined 7.35 million yuan
Administrative penalty information shows that the Zhejiang Regulatory Bureau of the State Financial Supervision and Administration Bureau has imposed an administrative penalty decision on MyBank, fining it RMB 7.35 million, and two responsible persons have been warned. The penalty decision was made on August 14.
Specifically, there are 13 major violations of laws and regulations committed by MyBank, including:
Failure to disclose major changes in corporate governance in a timely manner; continued major related-party transactions without review and approval; change of business premises without approval; late reporting of information on criminal cases; failure to publicize service price information as required; imprudent management of personal loans, with loan funds being diverted for other purposes; unclean transfer of credit assets and false reporting of balance sheets; raising deposit rates in violation of regulations; failure to determine the entrusted payment limit for loan funds and failure to implement entrusted payment supervision requirements; imprudent management of non-standard assets; failure to fully measure the credit risk-weighted assets of bill rediscount business; lax review of trust products sold on behalf of others; and incorrect use of accounting subjects for investment in wealth management products.
Lin Xueguan, then head of the Interbank Finance Department of MyBank, and Yu Hongxing, then product manager of the Cash Management Department of MyBank, were both warned by regulators.
Securities Times and China Securities Journal reporters learned that the punishment was aimed at the illegal operations found during the comprehensive on-site inspection by regulators in 2022. MyBank said: In response to the problems found in the regulatory inspection, the bank sincerely accepted and basically completed the rectification. In the future, it will learn from it, strengthen internal control and compliance management, and promote the bank to improve its compliance management level.
Regarding some of the illegal and irregular facts that were punished, the reporter learned that the "delayed reporting of criminal case information" was four loan frauds by external personnel against MyBank from 2020 to 2022. After MyBank reported the case to the public security organs, it did not report it to the Zhejiang Regulatory Bureau of the State Financial Supervision and Administration Administration in a timely manner.
"Major related-party transactions without approval" refers to the non-credit business conducted by MyBank with Zhonghe Rural Credit Project Management Co., Ltd. and Zhejiang Dasouche Financial Leasing Co., Ltd. in 2015 and 2018. Currently, MyBank has terminated the relevant business in 2019 and 2020, respectively.
"Illegally raising deposit interest rates" means that a deposit product held by Ant Financial Services Group violated the interest calculation rules and paid nearly 110,000 yuan in extra interest to users.
Xiaoshan Rural Commercial Bank fined 4.5 million yuan
In the administrative penalty information disclosed on the same day, Zhejiang Xiaoshan Rural Commercial Bank was fined 4.5 million yuan, and two relevant responsible persons, including the deputy president, were warned and fined 300,000 yuan.
The bank's main illegal and irregular facts this time include: imprudent loan management, with funds flowing back as collateral for bank acceptance bills; imprudent management of working capital loans, with funds being diverted to the stock market; imprudent management of personal business loans, with funds flowing into the stock market illegally; failure to reasonably share property insurance premiums for small and micro enterprise collateral; and defects in post-investment internal control management of interbank borrowing business.
The bank's then-vice president Ni Hongbin and then-general manager of the asset management department Wu Ming were both warned and fined 300,000 yuan. The date of the above penalty decision is August 12, 2024.
China Exim Bank Zhejiang Branch fined 1.65 million yuan
In addition to MyBank and Xiaoshan Rural Commercial Bank, the Zhejiang Branch of the Export-Import Bank of China was also fined 1.65 million yuan for a number of violations of laws and regulations.
Specifically, the reasons for the bank's administrative penalty include: the "three checks" of loans were not prudent, and credit funds were diverted to equity investment; the "three checks" of loans were not prudent, and working capital loans were diverted to project construction; the use of loan funds was not strictly controlled, and some credit funds were diverted to purchase wealth management and structured deposits; the syndicated loan business was not prudent, rights and responsibilities were not matched, the flow of loan funds was not properly monitored, and some credit funds were diverted to pay land transfer deposits; the tracking and inspection of discount funds was not in place, resulting in the direct return of discount funds to the drawee.
Li Feng, then deputy director of the Fourth Corporate Customer Department of the Zhejiang Branch of the Export-Import Bank of China (in charge of work), Wang Jinhua, then director of the First Customer Service Department of the Zhejiang Branch of the Export-Import Bank of China, and Zhu Yongbing, then director of the Third Corporate Customer Department of the Zhejiang Branch of the Export-Import Bank of China, were all warned by regulators.
The date on which the Zhejiang Regulatory Bureau of the State Financial Supervision and Administration made the above-mentioned penalty decision was August 8, 2024.
Hangzhou Bank Wealth Management and Ningbo Bank Hangzhou Branch were fined
Also disclosed were administrative penalty notices against several financial institutions in Zhejiang Province.
Hangzhou Bank Wealth Management was fined 600,000 yuan due to the main illegal and irregular facts of "reinvesting after the entrusted wealth management product was terminated early without fulfilling the obligation to inform; the asset transfer price between wealth management products deviated from the fair value".
Ningbo Bank Hangzhou Branch was fined 700,000 yuan for the main violations of laws and regulations: "wealth management managers failed to implement customer suitability management requirements when recommending wealth management products to customers, selling wealth management products to customers that exceeded their risk tolerance; and selling asset management products to investors who did not meet the qualified investor identification standards."
According to incomplete statistics, since 2023, regulatory authorities have issued more than 1,700 fines to banking financial institutions. The penalized banks include large state-owned banks, joint-stock banks, city commercial banks and private banks.
Among them, in 2023, regulators punished 1,117 banks nationwide, 10 banks were fined more than 10 million yuan, and 6 banks were fined more than 20 million yuan. In the first half of 2024, 629 banks were punished nationwide, 2 banks were fined more than 10 million yuan, and 1 bank was fined more than 20 million yuan.
