Stringent measures to clamp down on bank frauds, risks

By Xie Jun Source:Global Times Published: 2020/5/10 19:42:21

Two people chat outside the headquarters of the China Banking and Insurance Regulatory Commission on April 8. Photo: IC

Hidden risks have propped up in China's banking sector, including alleged leaks of personal transaction information and controversial handing of wealth management products, which exposed the flaws of Chinese banks in dealing with the so-called intermediary businesses, experts say. 

China CITIC Bank is under official investigation by the nation's banking regulator, after a Chinese stand-up comedian accused the bank of disclosing his personal transaction information to a third institution. 

Bank of China (BOC) recently also drew fire over the handling of one of its crude oil futures products. Investors cried foul over the bank's decision to settle trades at historic negative prices, leaving them with hefty losses. And, other problems have emerged as well. 

In April, the China Banking and Insurance Regulatory Commission (CBIRC) imposed fines on three Chinese banks - the Bank of Communications, the BOC and China Everbright Bank -- for concealing information from the regulator. It imposed a fine of 2.6 million yuan ($0.37 million) on Bank of Communications, and a fine of 2.7 million yuan on the BOC. 

Zhao Qingming, an independent financial expert, said that those issues reflected the flaws of Chinese banks in dealing with some novel businesses like commodity futures trading and wealth management products.

"They don't understand those businesses as thoroughly as their traditional businesses like deposits, loans and bond investment, and risk management also lagged behind on those new business sectors," Zhao told the Global Times on Sunday. Zhao said that employees' flouting of the relevant law also posed risks to banks' operation.  

Lou Feipeng, senior economist at the Postal Savings Bank of China, said that banking risks are evolving and it's hard to avert them. "This means banks need to enhance their risk management ability," he told the Global Times. 

Despite some problems, both experts said that domestic banks' general risks are now controllable and pose less of a problem compared with other financial sectors like securities.

The government is also moving to rein in potential risks in the banking sector. In a management guideline rolled out by the CBIRC on Saturday on commercial banks' online loans, banks must include such loans in their overall risk management systems.  

"Amid rapid fintech development, hi-tech means are often used to infringe on the interests of consumers. To deal with the problems, high technology, like blockchain, should also be used more to protect consumers," Lou said.


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