China Minsheng Bank Says Sub-Branch Head Defrauded Customers of 1.65 Billion Yuan

(Beijing) — China Minsheng Bank Co. Ltd. gave more details Thursday of a police investigation into a wealth management product (WMP) fraud at the company, saying that 1.65 billion yuan ($239 million) was swindled from 150 clients at a Beijing sub-branch.

The fraud was carried out by individual employees who broke company rules, said Shi Jie, the deputy governor of Minsheng Bank who is responsible for risk control, during a meeting Thursday with investors. Shi said Zhang Ying, head of the Hangtianqiao sub-branch of the bank in Beijing, was under police investigation, as were several other employees.

The fraud came to light earlier this month when Minsheng Bank’s headquarters in Beijing received a tip that the branch had sold unauthorized WMPs to customers.

Zhang sold fake WMPs with counterfeit seals to bank customers and pooled the funds in personal accounts, Shi said. Shi said Zhang asked employees to help her look for target clients, and the illegal funds were shared among the participants, with some of the money used to purchase real estate, cultural relics and jewelry.

Shi said the bank and police had frozen bank accounts connected to the fraud, and seized cash, property and goods from suspects.

Previously, people familiar with the matter told Caixin that the money from the sale of fake WMPs was used to cover a fraud of up to 3 billion yuan in 2016 that involved bills of exchange, which are financial instruments similar to checks and promissory notes. But Shi denied any link between the two cases.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)