Bank tied to dodgy loan alert

Top News | Gary Poon and Bloomberg Apr 26, 2019
<p>China Minsheng Banking Corporation is the subject of a Hong Kong regulatory warning about risky lending practices.</p><p>David Webb, a shareholder activist and deputy chairman of the Securities and Futures Commission&#39;s panel on takeovers and mergers, said on his blog that CMBC had made a HK$300 million loan in New China OTC Fund 2, managed by China Urbanization Capital.</p><p>The loan probably involved the bank in a convoluted flow of funds to a subsidiary before they found their way into the fund and then an asset manager. The details were issued on Wednesday in a warning by the SFC and Monetary Authority, he added.</p><p>Webb said the fund then made a loan of HK$400 million to Delta Link, a special purpose vehicle under the asset manager.</p><p>The SFC and the authority said that they had inspected the local unit of a Chinese bank and found that it had entered into transactions that &quot;make it difficult to conduct rigorous risk assessment.&quot; Webb said they were referring to the bank.</p><p>Shares of China Minsheng Banking fell 2.17 percent and its subsidiary CMBC Capital 3.57 percent yesterday. In October, Webb named Minsheng Bank and CMBC among 26 stocks that investors should not own due to a complex web of dealings.</p><p>Minsheng Bank said in a statement it has a complete internal control system, and strictly complies with regulators&#39; requirements.</p><p>The bank didn&#39;t directly address whether it was the subject of the Wednesday regulatory notice, and added that it will step up self-inspection and compliance management to ensure its businesses are legitimate and compliant.</p><p>Spokesmen for the Monetary Authority and SFC declined to comment.</p><p>Mainland media reported that China Minsheng Banking is not the lender Hong Kong regulators warned about. Webb said he would not reply to the mainland report, as it did not tell readers its sources.</p><p>SAR regulators have repeatedly warned about lenders getting into complex financial transactions, as they step up scrutiny of financial institutions.</p><p>Wednesday&#39;s statement noted that other Chinese banks have engaged in similar activities.</p>

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May 2019