19 Banks in Northern China Fined for $3-Billion Pledged Loan Fraud

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A total of 19 lenders from the northern Chinese provinces of Henan and Shaanxi have been hit with fines worth 52.5 million yuan (USD$8.36 million) for their involvement in pledged loan fraud.

The China Banking Regulatory Commission announced on Friday that the fraud case involved criminals illegally pledging low purity gold to secure over 19 billion yuan (USD$3 billion) loans from the branches of some of the country’s biggest tenders, including Industrial and Commercial Bank of China and Postal Savings Bank of China.

According to an online statement from CBRC the case was the result of a lack of internal controls, as well as poor loan and collateral management.

CBRC also accused banks of being “excessively obsessed with pursuing scale and speed of business development,” at the cost of knowing their clients.

The case is the third major fraud case punished by the banking regulator since the start of 2018, after a dozen banks in Gansu province were hit with USD$46 million in fines for bill fraud, and the Chengdu branch of Shanghai Pudong Development Bank was hit with a 462 million yuan fine ($72.33 million) for concealing non-performing assets by extending credit to shell companies.

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