CBIRC Discloses List of ‘Illegal Shareholders’ of Banks, Insurers

Source: Regulation Asia Editors, Regulation Asia 2020-07-07

20 of the 38 companies on the list are linked to either Baoshang Bank or Anbang Insurance, which both needed a state bailout in recent years.

The CBIRC (Chinese Banking and Insurance Regulatory Commission) has published a list of 38 ‘illegal shareholders’ that will be forced to divest from banks and insurance companies, the FT reports.

Ten companies on the list are connected to Baoshang Bank, which the government was forced to take over last year due to “serious credit risks”. The bank’s former controller, Xiao Jianhua, is said to have used Baoshang Bank made inappropriate loans to companies connected to a conglomerate (Tomorrow Group) he also controlled, contributing to a buildup of bad assets at the bank. Xiao was said to have been taken into custody in 2017 and tasked with helping in corruption investigations involving other high-ranking officials. It is unclear what charges he will face.

Ten other companies on the list were linked to Chengdu Rural Commercial Bank, which was controlled by Wu Xiaohui, the former chairman of Anbang Insurance. Anbang required a USD 10 billion injection from the China Insurance Security Fund in 2018 to contain financial risk. Wu was sentenced to 18 years in prison in May 2018 for fraud, corruption and embezzlement.

In September last year, the CBIRC issued new rules governing related-party transactions at insurance companies, limiting the amount of money they can invest in subsidiaries. The move was seen as a response to the web of cross-affiliate investments identified at Anbang.

“There are still a few shareholders of banking and insurance institutions that do not comply with the regulations, carry out connected transactions in violation of regulations, seek improper benefits, and even resort to illegal or illegal means to withdraw or misappropriate funds,” the CBIRC said, adding that it will strengthen disclosure to stamp out illegal shareholders.

The CBIRC notice naming the illegal shareholders is available here.

CBIRC

illegal shareholders

CBIRC Discloses List of ‘Illegal Shareholders’ of Banks, Insurers

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