China Construction Bank investigates wealth management product dispute
SHANGHAI (Reuters) - China Construction Bank Corp (CCB) (601939.SS)(0939.HK) said on Thursday that it is investigating allegations by investors that a clerk at the country's second-biggest lender misled them into buying a wealth management product that underperformed.
Seven investors have complained to the country's banking and securities regulators after the product lost more than 30 percent of its value after being sold to them as a fixed-income product with guaranteed returns, the National Business Daily reported on Wednesday.
The dispute highlights the risks linked to wealth management products, which had grabbed national media attention earlier this month when a product sold to retail investors at a branch of Hua Xia Bank (600015.SS) in suburban Shanghai failed to pay out.
On Monday, CITIC Trust, run by one of China's largest investment firms, said it had delayed an interest payment due on an investment instrument marketed to wealthy investors mainly through banks.
The incidents had fuelled concerns over the health of the business that has ballooned to nearly 7 trillion yuan ($1.12 trillion) as depositors seek higher investment returns.
The CCB customers had bought the product issued by Northeastern Securities through a CCB branch in northeastern Jilin province, the National Business Daily said.
CCB is investigating the matter, a spokeswoman at the bank said.
Wealth management products have taken off in the past five years, with Chinese looking for investment choices other than real estate, betting on the country's roller-coaster stock markets or parking money in bank accounts that offer state-set deposit rates.
The majority of the products are short-term savings vehicles often created by third parties and issued through banks. The products mostly invest in stocks and money market instruments, promising returns of 4-5 percent.
But a sizeable amount have funneled money into riskier investments, offering double-digit gains by financing anything from property and infrastructure projects, to car dealerships, pop concerts and even the sale of ham.
($1 = 6.2353 Chinese yuan)
(Reporting by Zhang Shengnan in BEIJING and Samuel Shen and Kazunori Takada in SHANGHAI; Editing by Ryan Woo)
- Russia criticizes EU sanctions, raps U.S. over Ukraine role
- First Ebola victim in Sierra Leone capital on the run
- Short Gaza truce takes hold; many bodies pulled from rubble |
- Amazon's far-reaching ambitions, lack of profits, unnerve investors |
- Apple iPhones allow extraction of deep personal data, researcher finds