China’s Banking Authorities Issued Record Number of Penalties in 2018


China’s banking authorities hit domestic lenders with a record number of fines in 2018, following a crackdown on the sector amidst broader efforts to stem systemic financial risk.

The Chinese central government announced at the outset of 2018 that control of the property market would be one of the key themes for financial regulation that year, declaring that it would “strictly control the flow of personal loans into equity markets and housing markets in breach of regulations,” as well as heavily scrutinise all forms of  real estate financing.

In August CBIRC said it would make further improvements to diversified real estate credit policies, and apply strict punishments to offences including the provision of “down payment loans” and the illicit use of consumer loans for property investment.

The China Banking and Insurance Regulatory Commission (CBIRC) announced via its official website that banking regulators issued over 3,800 fines last year, hitting a record high for the agency.

Economic Information Daily reports that at least 30 banks received fines for real-estate related lending in breach of regulations, incurring over 50 fines from local banking regulators worth a total of nearly 100 billion yuan.

A broad range of domestic lenders received fines, running the gamut from big state-owned banks and joint-stock commercial banks to rural commercial and municipal commercial banks.

The Zhejiang province branch of ICBC, as well as the Hangzhou branch of Ping An Bank and Hangzhou United Rural Village Commercial Bank (杭州联合农村商业银行) each incurred fines worth over 300,000 yuan for failure to effectively monitor the use of loans, resulting in funds illegally entering the real estate sector.

The Ningbo branch of big four state-owned lender China Construction Bank incurred a 200,000 yuan fine from the Ningbo banking regulator for allowing funds obtained via personal loans to enter the stock and real estate markets, while the city of Xuancheng issued six fines for similar offences.

Banking regulators also sought to crackdown on other lending improprieties, with the Jiangxi province branch of Bank of China and a branch of China Construction Bank in Nanchang incurring fines of 300,000 yuan over the misappropriation of consumer loans.

The Shanghai branch of CBIRC also issued 15 fines worth a total of 10.4 million yuan on a single day last year, to 13 financial institutions that engaged in improprieties in relation to consumer loans, including Agricultural Bank of China, Standard Chartered, Ping An Bank and Shanghai Pudong Development Bank.