China’s banking regulator has denied over sixty people qualifications to hold senior executive positions at commercial lenders since the start of 2020, as it intensifies its scrutiny of beleaguered regional banks.
As of 3 September a total of 66 people have had their qualifications to hold senior executives positions (including directorships) at banks denied since the start of 2020, according to data from the China Banking and Insurance Regulatory Commission (CBIRC).
In the month of August alone 14 Chinese bankers were refused qualifications for holding senior executive positions.
CBIRC refused qualifications to 32 of these 66 senior banking executives on the grounds that they failed to pass relevant testing or assessments of professional knowledge.
In other cases promotions were refused on the grounds of insufficient seniority, insufficient educational qualifications, “unstable” personal or household finances and criminal records.
Zheng Lei (郑磊), chief economist with Glory Sun Fin (宝新金融) said that the the increase in the number of senior executive refusals was the result of CBIRC stepping up its scrutiny of small and medium-sized banks, particularly following a spate of regional banking failures since May 2019.
In addition to scrutiny of equity problems, regulatory compliance and risk management, Chinese regulators are also heightening their focus on the qualifications of senior personnel.
“The frequent refusal of qualifications to hold senior executive positions in banks reflects the fact that the candidates recommended lack the knowledge or experience required to work at commercial banks,” said Zheng to Securities Daily.
This issue is particularly the case at rural commercial banks, village county banks and rural credit unions, which account for the majority of senior executive refusals made on the grounds of failure to pass tests.
Deng Yu (邓宇), a senior researcher at the Xi’ze Research Institute (西泽研究院), said that there are still a number of left-over historical issues when it comes to the senior management of rural financial institutions, and that the sources for such personnel are “complex.”
“Under the current strict regulatory model, the number of senior management personnel who fail to satisfy provisions has increased.
“In addition to this the regulatory yardsticks are no longer just a formality, but a strict rules system, and those who do not satisfy appointment requirements are directly denied.”