BEIJING (Reuters) - China’s banking regulator said on Friday it has penalized 13 financial institutions for providing funds to China Guangfa Bank, imposing fines and confiscating illegal income totaling 1.34 billion yuan ($206 million).
The regulator has confiscated a total of 661 million yuan of illegal income and handed out fines totaling the same amount, according to a statement posted on the website of the China Banking Regulatory Commission (CBRC).
Guangfa Bank had provided illegal guarantees for corporate bonds issued by Chinese phone maker Cosun Group, and sought to conceal the extent of the bank’s debts.
When the high-yielding bonds defaulted in December 2016, the online platform on which the securities were sold wanted Zheshang Property and Casualty Insurance Co, the insurer of the bonds, to repay investors.
Guangfa Bank then said the documents the Guangzhou-based bank had given to the insurer to back the bonds were all fake.
CBRC previously said the case was one of the most grievous instances of collusion. Earlier this month, the banking regulator imposed a record financial penalty on Guangfa Bank and said the fraud had involved 12 billion yuan and more than 10 financial institutions.
Among the 13 financial institutions that had supplied funds to Guangfa Bank were the Postal Savings Bank of China Co (1658.HK) and the Zhengzhou and Qingdao branches of Industrial Bank Co (601166.SS), the CBRC said in a statement on Friday.
Five rural commercial banks and a credit cooperative in the northeastern province of Jilin were also punished by CBRC.
Reporting by Ryan Woo and Beijing Monitoring Desk; Editing by David Evans