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Corruption investigation expands to finance sector

By Jiang Xueqing | China Daily | Updated: 2015-02-04 07:52

Bank of Beijing Co Ltd Board Director Lu Haijun is being investigated for serious disciplinary violations, the bank said in a statement to the Shanghai Stock Exchange on Tuesday.

Analysts said recent cases involving banks showed that China's anti-corruption campaign has expanded into the financial sector.

Bank of Beijing received a written notice from Beijing Energy Investment Holding Co Ltd about Lu being investigated because he is the former chairman of the company.

The bank said the incident "will not affect its normal operations".

Mao Xiaofeng, former president of China Minsheng Banking Corp, was taken away for investigation on Friday by the Central Commission for Discipline Inspection.

Minsheng shares slid 3.2 percent in Shanghai and 3.1 percent in Hong Kong on Monday. The declines showed that investors regarded the investigation as the beginning of China's anti-corruption campaign in the financial sector, said Mu Hua, a Guangzhou-based analyst at GF Securities Co.

Ni Jun, a Shanghai-based banking analyst, said the anti-corruption campaign may have a bigger impact on small banks such as city commercial banks, compared with large State-owned banks.

"Small banks have close relations with the local governments in terms of business projects and deposits. If the president of a small bank steps down, the personnel change will have a relatively but huge influence on the bank, and the bank will adjust its reliance on political connections," Ni said.

"The operation of large banks, on the contrary, is less likely to be affected by individuals. Even the appointment of a new president will not have a big impact on their performance, which depends more on the macroeconomy."

Several analysts and academics estimated that the impact of anti-corruption campaign will be minimal on the banking sector.

Raymond Yung, financial service leader of PwC China, said: "The recent investigations only involve the personal behavior of certain bank executives and board directors. They will not affect investors' confidence or their outlook for the long-term development of Chinese banks."

Hu Bin, deputy director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences, said: "The investigations will not affect the healthy development of the financial sector because Chinese banks are market-oriented with a sound corporate governance structure. Their daily operations will not be influenced by individuals."

Zhao Xijun, deputy dean of the School of Finance at Renmin University of China, emphasized the necessity of anti-corruption efforts and said the country could only ensure fair competition in the financial sector with the establishment of a sound legal system and information transparency.

jiangxueqing@chinadaily.com.cn

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