State-owned Bank of China (BoC) has been fined 50.5 million yuan ($7.73 million) over irregularities in a loss-making product linked to crude oil, the banking regulator said on Saturday.
The China Banking and Insurance Regulatory Commission began an investigation after BoC settled trades for its product at negative prices following April’s crash in U.S. crude futures, leaving many retail investors facing losses.
The regulator levied penalties on the bank and some of its branches for what it called the bank’s irregular product management, imprudent risk management, incomplete internal controls and non-compliant sales management.
In a statement on its website, the regulator added that it had issued warnings and fines to four people in the bank’s global markets department, and suspended “access for Bank of China’s relevant business and branches”, but did not elaborate.
In response, BoC said in a website statement it was “determined to accept the penalties” and take relevant regulatory measures.
The bank is considering compensating investors up to a fifth of original investments in the products and shouldering all losses in negative territory, sources told Reuters in May. That could amount to as much as 6 billion to 7 billion yuan.
Regulators have also asked commercial banks to halt sales of wealth management products that could leave investors with unlimited losses, sources said.
By Andrew Galbraith and Winni Zhou