Dec 04, 2020 06:44 AM

Exclusive: Senior Liaoning Banking Regulator Turns Himself In for Graft Probe

Chinese regulators are tightening oversight of smaller banks after several high-profile cases shook the industry.
Chinese regulators are tightening oversight of smaller banks after several high-profile cases shook the industry.

A senior financial regulatory official in northeast China’s Liaoning province turned himself in to the country’s top anti-graft watchdog, extending a series of cases that are rattling the local banking sector.

Liu Wenyi, an official in charge of banking supervision at the Liaoning branch of the China Banking and Insurance Regulatory Commission (CBIRC), was placed under investigation for “suspicion of serious law and discipline violations” after he took the initiative to surrender, the local branch of the Central Commission for Discipline Inspection and the National Supervisory Commission said Thursday in a statement.

The top graft busters didn’t elaborate on what violations Liu is suspected of. Caixin learned that he is linked to a recent crisis at local lender Bank of Jinzhou Co. Ltd. and the corruption investigation of a former head of Bank of Huludao.

Liu, 57, was responsible for direct oversight of Liaoning’s city commercial banks, a sector plagued by mounting bad loan risks. Earlier this year, the financial crisis at Bank of Jinzhou forced the central bank to inject nearly 12.1 billion yuan ($1.7 billion) in a rescue.

The rescue of Bank of Jinzhou was one of several that Chinese authorities have orchestrated as they work to curb financial risks in the banking sector, especially among regional lenders. Several executives of the bank have been investigated over the crisis.

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Liu is a Liaoning native and a veteran of the local financial industry. He spent 15 years in local branches of the central bank before he was assigned to top management posts in the Huludao City Credit Union in 1996, which later restructured to become Bank of Huludao.

In 1998, Liu returned to the central bank system, taking the post of vice director at the bank’s Huludao branch. In 2003, Liu was named to head the city office of the China Banking Regulatory Commission, the predecessor of the CBIRC. He rose to senior supervisory positions at the CBIRC’s Liaoning provincial branch in 2018.

Chinese regulators are tightening oversight of smaller banks after several high-profile cases shook the industry. In August, the former president of Bank of Huludao, Wang Xueling, was placed under investigation for graft. The CBIRC at that time instructed the regional lender to improve its corporate governance.

Wang, president of the Huludao lender since 2005, had a stained track record and was punished for embezzlement. He was removed from the top post of the bank in 2007 but reinstalled in 2018 as the bank’s chief.

The industry was surprised by Wang’s return. People familiar with the matter said Wang won support from senior officials at the local banking regulatory body.

Bank of Jinzhou reported a net loss of 4.5 billion yuan in 2018, swinging from a 9.1 billion yuan profit for the previous year, as it took a 23.7 billion yuan charge related to a decrease in the value of its assets. The plunge in asset values stemmed primarily from soured loans and write-downs that the bank was required to make following a change in accounting rules, according to the annual report.

Timmy Shen contributed to the story

Contact reporter Han Wei ( and editor Bob Simison (

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