Crude Oil Treasure' Debacle Leads to Fine for Chinese Bank
07 Diciembre 2020 - 3:42AM
Noticias Dow Jones
By Chong Koh Ping and Xie Yu
One of China's biggest banks has been fined nearly $8 million
over an investment product that generated big losses for individual
investors when U.S. oil prices briefly went negative.
Bank of China Ltd. was fined 50.5 million yuan, the equivalent
of $7.7 million, and four of its global markets staff were fined a
further 1.8 million yuan, the equivalent of $280,000, after an
investigation into the "Crude Oil Treasure" product, the China
Banking and Insurance Regulatory Commission said Saturday.
Many investors in the product were wiped out when U.S. crude
futures settled at an unprecedented minus $37.63 a barrel in
April--and were told they also had to compensate the bank for the
negative value of their holdings when those were sold.
Some investors later said the state-owned bank had offered to
return 20% of their initial investments and cover any further
losses.
The regulator said Bank of China had broken several laws and
regulations. Among other things, it cited problems with contract
terms and internal controls, including unreasonable incentives for
staff. It said some clients were allowed to invest despite being
too young to buy the product, and the bank used exaggerated
advertising and offered gifts to attract customers.
Bank of China said it had made changes as required by the
regulator, including reviewing potential risks, improving risk
controls, and standardizing sales management. "In future, the Bank
will conduct its business operations more prudently and at a higher
professional level," it said in a stock exchange filing Sunday.
Some investors haven't accepted the bank's earlier deal and are
still seeking redress in court. Zhang Ye, a 35-year-old mechanical
engineer in the southeastern city of Zhuhai, said he wants the bank
to restore at least half of his initial investment of around
200,000 yuan and provide a clearer explanation of what went
wrong.
Mr. Zhang said that after filing a lawsuit at a local court in
October, he got a call telling him to wait until several similar
cases could be handled collectively. "I am not hopeful about
getting more compensation, " he said. "I hold on because I think
what has been done by BOC isn't fair and we deserve a better
explanation."
Chen Shujin, a banking analyst at securities firm Jefferies,
estimated the episode could cost the bank 6 billion to 10 billion
yuan, including costs for lawsuits and arbitration. "Overall, the
revenue that BOC can earn from such products is not that much...yet
they have incurred steep losses and are now being slapped with
additional penalties. They will be much more careful in the
future," she said.
Large Chinese banks have suspended offering similar
commodity-related investments as the underlying asset prices tended
to be volatile, she said. "[Banks] will have to reconsider how to
classify these products and redesign them," she said, perhaps
marketing them only to private investors with very high risk
tolerance.
Write to Chong Koh Ping at chong.kohping@wsj.com and Xie Yu at
Yu.Xie@wsj.com
(END) Dow Jones Newswires
December 07, 2020 04:27 ET (09:27 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Bank of China (PK) (USOTC:BACHY)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Bank of China (PK) (USOTC:BACHY)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024