Exclusive: Two Executives of ICBC’s WMP Unit Arrested in Beijing
Two veteran wealth managers at state-owned Industrial and Commercial Bank of China (ICBC) were arrested and taken away in handcuffs from work Friday in Beijing, Caixin learned from multiple sources.
Those arrested were Li Chao, investment manager at the fixed income department at ICBC’s newly established wealth management unit, and Yi Chongbin, deputy director at the trading division of the unit. ICBC hasn’t commented.
The reasons for their detention weren’t known. Li and Yi, ICBC veterans, transferred from the bank’s asset management department to the wealth management products (WMPs) unit.
With more than 30 trillion yuan ($4.6 trillion) of assets, ICBC is the world’s largest bank by assets. As of June, the bank managed 2.5 trillion yuan of WMPs. ICBC was among the first state-owned banks to set up WMP units in May 2019 as part of an overhaul in the country’s $12.9 trillion WMP industry.
The bank recently started making adjustments to its entrusting business, in which the bank entrusts mutual funds or other asset management firms to sell its WMPs. Since the beginning of the second half, ICBC stopped new entrusting business at its asset management department. Recently, the bank stopped entrusting cooperation with all private equity funds, people from several funds told Caixin.
In the past, banks had to sell WMPs through a mutual fund partner. In the final version of new rules issued in 2018, banks are allowed to directly invest in stocks by creating WMP units. The rules aim to create a firewall around banks’ wealth management businesses by separating them from banks’ other business in an effort to break any implicit guarantee that these investments will be bailed out if they sour.
Contact reporter Denise Jia (email@example.com) and editor Bob Simison (firstname.lastname@example.org).
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