An executive of China Merchants Bank was arrested in the southern city Guangzhou in connection with the commercial bank’s collaboration with a busted peer-to-peer (P2P) financial platform.
The Guangzhou Tianhe District Procuratorate issued warrants Nov. 20 for the arrest of Zuo Chuanghong, who is in charge of Merchants Bank’s collaboration with the P2P app Qianduan, and Qianduan’s controlling owner Chen Qian, the procuratorate said Tuesday on its website.
In 2013, as one of the first Chinese banks to test the P2P business, China Merchants Bank launched an entrepreneur financing platform, Small Business E-home, in collaboration with Qianduan. The bank recommended Qianduan to its clients from 2015 to 2017.
China Merchants Bank said the collaboration ended in April 2016. After that, Qianduan and its affiliate Guangdong Wangjin Holdings Co. Ltd. continued using the bank’s name and logo to mislead investors, the bank said. The parties are suing each other over the termination of their collaboration.
In May, Qianduan failed to pay 1.4 billion yuan ($200 million) to about 9,000 investors. The local police in Guangzhou investigated the case after receiving complaints from multiple investors who bought wealth management products from the platform.
Zuo has been vice general manager of China Merchants Bank and head of the bank’s Foshan Branch. The bank’s collaboration with Qianduan happened while Zuo was the vice general manager.
Through the Small Business E-home platform, China Merchants Bank sells off-balance sheet loans on Qianduan to earn higher interest rates, people from the bank told Caixin. Banking regulators said the bank misled investors when promoting Qianduan’s products.
Contact reporter Denise Jia (firstname.lastname@example.org)