Chinese authorities warned top bank executives late Friday that the crackdown against the $60 trillion industry was far from over. This just as they were about announce the investigation of the country’s most senior state banker for nearly two decades.
According to sources familiar with the matter, officials from China Banking and Insurance Regulatory Commission and Central Commission for Discipline Inspection summoned top executives from at most six large state-owned banks to discuss the investigation into Bank of China Ltd.’s former Chairman Liu Liange.Just as the CCDI had annouced Liu’s investigation in a single sentence statement, he was being investigated for “serious violations” of law and discipline.
CBIRC, CCDI, and CCDI stated that they will intensify the crackdown against corruption in the financial sector and that bankers should learn from Liu. The people said that banking staff, particularly senior executives, need to comply with regulations and improve self-discipline.
Although it is not unusual for authorities to summon bankers at short notice following a high-profile investigation, this latest warning shows that President Xi Jinping has been accelerating his anti-graft campaign even after his initial success last year. Since February, at least 20 financial executives have been investigated or punished. Bao Fan, the star banker and chairman of China Renaissance Holdings Ltd. disappeared nearly two months ago.
CBIRC and CCDI did not immediately respond to our inquiries.
A clampdown on the finance industry that began in late 2021 is not slowing down and has already rocked it is rocking the financial sector. This dragnet is the largest ever and it ties in with a wider government shakeup that began when Xi entered a third term.
CCDI announced last week that it will conduct a new round of checks at more 30 state-owned businesses, from China Investment Corp. and PetroChina Co., as well as a “look back” at five financial institutions that were previously targeted.
Liu was announced as an investigation just a month after his abrupt removal from the position of party chief at the fourth-largest bank in the country. After placing her under investigation a year ago, China expelled Jiang Liming from the Communist Party.
The CCDI announced Monday that Huang Xianhui (ex-general manager and party chief at China Huarong Asset Management’s Beijing branch) is being investigated for serious violations of the law.
Huarong was China’s former largest bad-debt administrator. However, it has been plagued with scandals and suffered huge losses. After being convicted of bribery and other crimes, Lai Xiaomin was the former chairman.
Xi also increased his control over the sector by announcing a comprehensive overhaul of the financial regulatory system as he started his third term. The long-defunct Central Financial Work Commission will be resurrected to help guide party building in this sector, including personnel arrangement and corruption.
Chinese officials are also trying to restore trust in the world’s second largest economy. Premier Li Qiang said that he supports the private sector at the National People’s Congress, which took place in March.
Yi Huiman (head of the China Securities Regulatory Commission) on Friday reiterated China’s determination to open up its capital markets during a meeting with the heads 10 international financial institutions including Goldman Sachs Group Inc. in Beijing.