BEIJING (Reuters) - China’s banking regulator has ordered banks to tighten checks on the sale of third-party financial products made through their branches to ward off potential risks, the Southern Metropolis Daily said on Wednesday.
The China Banking Regulatory Commission (CBRC) issued an “urgent” internal circular last Friday requiring banks to check their sales of third-party products, mainly insurance, trust products and investment funds, said the newspaper, which is based in the southern Chinese city of Guangzhou.
Banking sources contacted by Reuters confirmed that they had received a CBRC circular but would not discuss the contents.
Banks must complete investigations within 15 days and the CBRC will also conduct random checks on bank branches after they hand in self-assessment reports, the newspaper said.
“If bank branches find rule-breaking behavior and major risks, they must report to their headquarters immediately and work with cooperative institutions to take effective measures to resolve risks and report to bank regulators in time,” it said.
The sale of banks’ own wealth management funds will not be affected by the move, the paper said.
Banking regulators are worried about the risk of a crisis of confidence in wealth management products, following investor protests at Hua Xia Bank (600015.SS) after a product sold through its Jiading branch in a suburb of Shanghai failed to pay out upon maturity late last month. The bank says a branch employee sold the product without authorization.
Reporting by Xiaoyi Shao, Shengnan Zhang and Kevin Yao; Editing by Nick Edwards and Jacqueline Wong