China Banking and Insurance Regulatory Commission (CBIRC) fined five banking institutions a total of RMB387.9m (USD56.5m) for irregularities in their businesses, as reported by Reuters on February 17. Specifically, Bank of China (BOC) [3988:HK], China Minsheng Bank (CMBC) [1988:HK], and China Bohai Bank [9668:HK] were fined RMB32.8m, 89.7m, and 16.6m (USD4.7m, 13.1m, and 2.4m) for irregularities including the misappropriation of loan funds and false statistics. Meanwhile, China Construction Bank (CCB) [0939:HK] and Standard Chartered Bank (China) [2888:HK] were fined RMB199m and 49m (USD28.9m and 7.1m) for irregularities such as serious violations of prudent loan management operation rules and non-compliance with wealth management business operations.

The fine levied on CCB represents the largest single penalty imposed by the CBIRC since 2019. In 2022, the banking regulator punished 4,620 banking and insurance institutions and 7,561 individuals, confiscating RMB2.89bn (USD421m) in total. To prevent systemic financial risks, CBIRC vows to enforce strict administrative penalties in accordance with the law and tighten market discipline. The recent penalties on BOC and CMBC continued its efforts since 2021 to prevent business loan inflows into the heavily leveraged property sector. According to CBIRC, these two banks failed to accurately report the misappropriation of loans designated for small and micro-enterprises, which generally carry lower interest rates compared to property loans. In March 2021, CBIRC required banking and financial institutions to enhance investigations into the purposes of business loans, especially with borrowers who applied shortly after concluding real estate transactions.

Sources:

https://www.reuters.com/article/china-banks/update-1-china-banking-regulator-fines-five-firms-over-irregularities-idUSL1N34X0MZ

https://finance.caixin.com/2023-02-18/101999323.html

https://www.globaltimes.cn/page/202302/1285701.shtml

https://english.news.cn/20230217/897764c514fd49fe824b0f934b0e5974/c.html