SHANGHAI, Dec 5 (Reuters) - The husband of the employee sacked by China’s Hua Xia Bank Ltd for allegedly selling wealth management products without authorisation said his wife had been made a scapegoat to deflect the bank’s responsibility for the failed products, local media reported on Wednesday.
Hua Xia Bank said on Monday that an employee at the bank’s Jiading branch in a Shanghai suburb sold products issued by the Zhongding Wealth Investment Center without permission, and a police investigation was under way.
Hua Xia’s statement followed media reports that the products had stopped making payments to investors upon maturity.
In the last few years, sales of so-called wealth management products have soared in China, as banks compete for deposits in higher interest rate products than those offered on savings accounts.
Sales of the products grew to 12.14 trillion yuan ($1.95 trillion) in the first half of 2012, according to a July report by consultancy CN Benefit. Hua Xia Bank was one of the five most active issuers cited in the report.
On Wednesday, the news portal of Chinese firm Netease Inc quoted the employee’s husband as saying the bank should bear responsibility. The man, identified only by his surname Xu, has hired lawyers to defend his wife, who has been arrested and is in police custody, the news portal reported.
“As a customer manager, Tingting (his wife) had no authority to transfer money over the counter or examine product risks,” the husband told Netease.
“The products had been on sale for half a year, and now the bank is pushing the responsibility on her. Why is the bank sacking her now, when the products failed, rather than six months ago?”
Attempts to reach Xu were unsuccessful, and Hua Xia officials declined to comment.
It was not clear how many of the wealth management products had been sold by the bank, but a spokesman for Hua Xia’s Shanghai operations said on Tuesday the bank may face some liability over the issue, without elaborating.
Hua Xia has said it was “aware” of reports that the investments could not be repaid when the product matured, but it has not confirmed the media reports.
So far, there has not been a high-profile case of default by a Chinese wealth management product, many of which are marketed by banks and highly sought by retail depositors attracted by their higher interest rates. Banks’ liability for the performance of third-party instruments is untested.
Many of the products essentially channel money to the so-called shadow banking system, where they help fund real estate and other projects at very high interest rates. (Reporting by Samuel Shen and Kazunori Takada; Editing by Ken Wills)