China Minsheng Bank has established a team to assist police in the investigation into a branch head who was suspected of fabricating wealth management products (WMPs) that involves 150 investors and 3 billion yuan ($436 million).
The bank said in a statement that Zhang Ying, head of the bank's Hangtianqiao branch in Beijing, has been detained by the police and is under further investigation. The bank will cooperate with the police in solving this case, ensure clients' financial security, cater to the requests of all parties involved and accept legal accountability, news site caixin.com reported.
According to the 21st Century Business Herald, until Monday morning, more than 120 investors have registered to request the bank to pay back their investments in WMPs in due time and investigate the illegal activities.
Investors were told by Zhang that the financial products were sold by other investors and she promised that they could get their principal and an annualized interest of 8.4 percent, the report said.
Material provided by the investors showed the products were "issued by China Minsheng Bank," and carried the branch bank's official deposit stamp. However, the bank previously told one investor that it was a personal act of Zhang.
The bank should shoulder legal accountability for these investors despite doubts about the authenticity of the stamp, as investors do not have the obligation to examine the stamp, Wang Fu, a lawyer with Beijing Zhenbang Law Firm, told the Global Times, adding that the case reflects negligence in management.
Wang said it is common for employees of Chinese banks to illegally cooperate with other private financial institutions, in order to sell WMPs to the bank's customers.
Wang added that the illegal activities are hard to detect because there are different regulators for different financial fields.
To bring order to the market, Premier Li Keqiang in April called for efforts to crack down on bank violations when it comes to extending credit, insider trading in the securities market and insurance fraud.
He urged "relentless" punishment of internal supervisors and company managers who collude with major players in the market and steal and sell confidential information.