Financial institution of East Asia downplays considerations over govt’s arrest

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Financial institution of East Asia has downplayed the reported detention of one in all its executives in mainland China over bribery allegations, placing the highlight on the Hong Kong-based lender already reeling from a surge in impairment losses linked to the struggling property sector.

Chen Zhiren, executive-vice president and head of northern China for BEA China, was detained by Beijing police in July in reference to bribery allegations, monetary information web site Cailianshe reported on Tuesday.

Chen is suspected of skirting credit score guidelines and issuing loans in change for bribes. The investigation could also be prolonged to a different unit of the financial institution, East Asia Qianhai Securities, the report stated, citing nameless sources.

The reported detention comes as Beijing intensifies its anti-corruption marketing campaign focusing on banks and different monetary corporations to curb graft linked to high-risk loans.

“In line with the data accessible to the financial institution, this matter pertains solely to the non-public actions of a person worker,” BEA stated in a press release to the Monetary Instances.

“BEA has stringent inside management mechanisms and protocols in place. This matter has no impression on BEA China’s lending enterprise and doesn’t contain East Asia Qianhai Securities.”

BEA, which has a powerful presence in Hong Kong, was one of many first lenders exterior the mainland to arrange an included financial institution in China when the nation opened up its banking sector in 2007, together with HSBC and Customary Chartered.

It stays probably the most franchised worldwide banks in China and its loans to mainland shoppers accounted for about 36 per cent of its complete lending as of the tip of June.

As with its friends, the lender suffered from a surge in impairment costs on loans within the first six months of 2022, primarily due to debtors uncovered to the Chinese language industrial actual property sector. It reported a internet revenue of HK$1.5bn ($191mn) for the primary half of this yr, down 44 per cent from a yr earlier.

Brian Li, BEA’s co-chief govt who oversees mainland and worldwide enterprise, known as the credit score surroundings within the mainland “very difficult, particularly with the property sector,” based on an internet earnings briefing. Web revenue for the financial institution’s Chinese language arm collapsed 99 per cent within the first half of the yr to simply HK$2mn.

BEA China was fined Rmb11.2mn by the China Banking and Insurance coverage Regulatory Fee in Might 2021 for violating guidelines towards granting loans to actual property builders and failing to file these loans within the property mortgage part.

The financial institution’s Ningbo department was fined one other Rmb300,000 this April for violating credit score danger administration guidelines and permitting the embezzlement of improvement loans to property builders.

Extra reporting by Chan Ho-him in Hong Kong

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