The former chairman of beleaguered regional lender Hengfeng Bank has been sentenced to death by a Shandong province court.
The Middle People’s Court of Yantai municipality in Shandong province announced on 26 December via its official WeChat account that it had found Jiang Xiyun (姜喜运), former chair of Hengfeng Bank, guilty of corruption, bribery, the illegal issuance of financial documents and the wilful destruction of accounting documents.
The court gave Jiang Xiyun a death sentence, which can be commuted to a sentence of life imprisonment following a two-year reprieve period, as well as confiscated all of Jiang’s personal assets.
The sentencing arrives just after Hengfeng announced that it would receive a 100 billion yuan bailout from Beijing, via the sale of shares to parties including state-owned vehicles Central Huijing Investment and Shandong Financial Asset Management.
In June the China Banking and Insurance Regulatory Commission (CBIRC) announced that it was accelerating its restructuring of Hengfeng after the Shandong-based mid-sized bank failed to provide financial statements for two consecutive years.
According to the Yantai court during the period from January 2008 to January 2013 Jiang used his position as Hengbank Bank chair to transfer 283.659 million shares in Hengtai Bank to companies controlled by himself and his friends and relatives.
The total value of the shares transferred was equal to over 754 million yuan (approx. USD$107.712 million), given net assets per share as determined on the basis of Hengfeng Bank’s annual reports.
Jiang and another bank executive also received bribes worth in excess of 60 million yuan.
Other Hengfeng Bank executives tried by the Yantai court included
- Zhao Chunying (赵春英), former vice-president and financial executive with Hengfeng Bank, who received a prison sentence of 12 years and a fine of 1 million yuan for bribery;
- Zhang Wenkai (张文凯), former vice-president and head of the credit risk monitoring department, who received a prison sentence of two years and ten months for issuing financial documents in breach of regulations;
- Sun Jinguang (孙金光), who received a prison sentence of two years and nine months and a fine of 20,000 yuan for deliberately destroying accounting documents.
2019 has been a tumultuous year for smaller regional lenders in China, with a string of bank runs and upsets which in several cases necessitated intervention from the central government.
Two regional banks in China suffered abortive bank runs within a two week period in early November – Yingkou Bank in the northeastern province of Liaoning and Yichuan Rural Commercial Bank in Henan province.
Earlier in the year the Chinese government took over Inner Mongolia’s beleaguered Baoshang Bank in May, for the first such forcible acquisition in more than two decades, while a trio of leading state-owned financial institutions subsequently took over the north-eastern Bank of Jinzhou in July.