Bank Regulator Has Already Handed Out Double the Fines This Year Than all of 2016

A slew of policies and harsh punishments over fraudulent and improper practices appear to have reined in risks in the banking sector, the China’s Banking Regulatory Commission (CBRC) said.

In the first eight month of 2017, the banking regulator handed down 2,095 punishments, with fines totaling 552 million yuan ($82.97 million), more than double the 270 million yuan for the whole year of 2016.

As of the end of August, 899 bank employees were fined 18.51 million yuan combined, the CBRC added.

Since March, regulators have issued a string of regulations aimed at cleaning up risky activities and lowering leverage in the interbank market, where banks and financial institutions borrow from each other. The cleansing is part of a national campaign to crack down on financial risks and maintain systematic stability.

“We need to take some temporary measures to curb market misdeeds,” Xiao Yuanqi, director of the CBRC’s prudential regulation bureau, said at a news conference on Thursday. “Meanwhile, we should also establish a long-term risk-prevention mechanism to reform the industry from within.”

Xiao said the CBRC will ask lenders to continue scrutinizing themselves for liquidity, mortgage and cross-sector financial risks.

Also at the conference, Xiao said authorities have closed their investigation into a fraud case involving a 1.65 billion yuan wealth management product (WMP) at Minsheng Bank.

The Minsheng case was one of the more high-profile investigations in China’s recent banking history. At the bank’s sub-branch in Beijing, 150 clients were lured improperly into buying high-risk WMPs. Xiao said some of the employees involved have been banned for life from the industry. The authorities have issued regulatory measures to correct operations at the sub-branch.

Caixin reported earlier that a total of eight Minsheng employees, including the head of the sub-branch, were involved in the fraud case. The case, criticized openly at the high-level National Financial Work Conference in July, was considered a big blow to Minsheng’s reputation.

Contact reporter Leng Cheng (chengleng@caixin.com)