Wednesday, October 28, 2020

Former Chairman of China’s Hengfeng Bank sentenced to death for corruption worth over $100 million

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The former chairman of struggling lender Hengfeng Bank Co. has been sentenced to death with a two-year reprieve by a Chinese court for making illegal gains of over $100 million.

Jiang Xiyun was convicted for moving 754 million yuan ($108 million) worth of Hangfeng shares to his personal account between 2008 and 2013, according to the Yantai Intermediate People’s Court. He also took bribes of more than 60 million yuan together with another bank executive, according to the Thursday ruling. A reprieved death sentence may be commuted to a life sentence if the person shows good behavior within the allotted period.

The conclusion of the trial underscores the troubles faced by Shandong-based Hengfeng Bank, which earlier this month became the latest regional lender in need of a rescue. The bank sold new shares for about $14 billion to a group of investors including a unit of China’s sovereign wealth fund and a local government-backed asset management firm.

Jiang had ordered others to destroy records for over 600 million yuan of transactions, according to Thursday’s ruling.

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China’s banking regulator said in June that the Shandong government was speeding up the restructuring of Hengfeng, a mid-sized bank that has failed to disclose its financial statements for two straight years. The lender had 1.2 trillion yuan of assets at the end of 2016, according to its most recent annual report.

China’s policy makers have stepped up efforts to restore confidence in its struggling banking system and its smaller lenders, a key source of credit to small and medium-sized companies. The sector has been particularly strained after the government shocked the market by taking over Baoshang Bank Co. in late May, the first bank seizure in more than 20 years.

Two months later, regulators took a different approach by having three state-owned financial heavyweights buy stakes in Bank of Jinzhou Co.

Source: Bloomberg

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