Sound the alarm before the Spring Festival!6 banks including China Merchants Bank and Guangzhou Rural Commercial Bank were ordered to rectify the bond underwriting violations

News from the Financial Associated Press, January 21 (Reporter Shi Sitong)On January 20, the last working day before the Spring Festival, the NAFMII issued six announcements on self-discipline, involving institutions including Bank of Communications, China Merchants Bank, Ping An Bank, Industrial Bank, Bank of Jiangsu, Guangzhou Rural Commercial Bank, etc. 6 banks.

Judging from the punishment information, this punishment refers to the irregular behavior of some banks in the bond underwriting and issuance business, or notices of criticism or warnings, and requires all banks to carry out comprehensive and in-depth rectification for related issues.

Analysts pointed out that allowing these problems to develop will affect the normal order of the issuance market, and the issuance rate will be distorted, which is not conducive to the discovery of market prices and the effective allocation of resources. Market Order.

It is worth mentioning that just over half a month ago, China Merchants Bank, China Guangfa Bank, and UnionPay Commerce were just revealed to have been fined over 134 million yuan in total for anti-money laundering violations. In the eyes of analysts, the two successive penalties have continuously sounded the alarm for compliance operations for financial institutions at the end of the year and the beginning of the year. In the future, the intensity of supervision focusing on “risk prevention” may increase day by day.

6 banks ordered to rectify

Specifically, Bank of Communications, China Merchants Bank, Industrial Bank, Bank of Jiangsu, and Guangzhou Rural Commercial Bank were sanctioned because they, as the lead underwriters and bookkeepers of debt financing instruments, violated some bank regulations in the underwriting and issuance work. Due to the behavior of the relevant self-regulatory management rules in the domestic bond market.

According to the self-discipline information, Bank of Communications’ violations include: 1. The multi-tranche debt financing instruments failed to carry out balance underwriting as agreed in the issuance documents, and individual debt financing instruments crowded out the normal bidding of other investors; 2. The bookkeeping of multi-tranche debt financing instruments The filing interest rate range was not formed on the basis of sufficient inquiry, the issuance work procedures were not implemented in place, and the work was not carried out in a standardized manner.

China Merchants Bank’s violations include: 1. The multi-tranche debt financing instruments failed to underwrite the balance in accordance with the issuance documents, and individual debt financing instruments crowded out the normal bidding of other investors; 2. Underwriting multi-tranche debt financing instruments at low prices; 3. Debt financing The signing of the instrument underwriting agreement was not standardized; 4. The book-building interest rate range of the multi-period debt financing instrument was not formed on the basis of sufficient inquiry, the issuance work procedure was not implemented in place, and the work was not standardized.

Industrial Bank’s violations include: 1. Underwriting multi-tranche debt financing instruments at low prices; 2. The book-building interest rate range of multi-tranche debt financing instruments was not formed on the basis of sufficient inquiry, the issuance work procedures were not implemented in place, and the work was not standardized . In addition, Industrial Bank was also subject to self-disciplinary punishment in May 2020 for violations in the underwriting process.

The violations of the Bank of Jiangsu are as follows: 1. Some debt financing instruments did not underwrite the balance in accordance with the issuance documents, crowding out the normal bidding of other investors; 2. Underwriting multi-tranche debt financing instruments at low prices; 3. Multi-tranche debt financing instruments The bookkeeping filing interest rate range was not formed on the basis of sufficient inquiry, the issuance work procedures were not implemented in place, and the work was not carried out in a standardized manner.

The violations of Guangzhou Rural Commercial Bank are as follows: 1. The underwriting of the balance was not carried out in accordance with the stipulations in the issuance documents, crowding out the normal bidding of other investors; In place, the work is not standardized.

Due to the above-mentioned violations, the above five banks were all given warnings and ordered to rectify by the NAFMII. At the same time, the NAFMII clearly pointed out in the disposition information that the debt financing instruments “failed to underwrite the balance as agreed in the issuance documents” and “underwrote at a low price” violated the principle of fairness and justice, and affected the issue rate, causing damage to the normal order of the market. certain adverse effects.

In addition, Ping An Bank, as the joint lead underwriter of relevant debt financing instruments, also failed to carry out balance underwriting at the upper limit of the interest rate range as agreed in the issuance documents. The relevant behavior squeezed out the shares of other market investors and damaged the rights and interests of other investors. , and affected the issue rate and the normal order of the market, and received a notice of criticism and ordered rectification.

Bond underwriting market regulation tightened

“The regulatory authorities intend to correct the improper behavior of some banks’ bond underwriting, protect the legitimate rights and interests of investors and maintain a fair, just, regulated and orderly market.” Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, analyzed that from the perspective of the reasons for the punishment of the regulatory authorities, it is mainly It involves some irregularities in the bond underwriting and issuance business carried out by some banks, and the implementation of relevant procedures is not in place. These behaviors have revealed that a small number of banks have some internal management problems in the bond underwriting business, as well as certain operational compliance risks. Allowing these problems to develop may affect the normal order of the issuance market, distort the issuance rate, and is not conducive to market price discovery and effective allocation of resources. .

Wang Pengbo, chief analyst of the financial industry at Broadcom Consulting, also said that the NAFMII regularly releases punishment information at the beginning of the year, and the main purpose is to maintain the stability of the inter-bank trading market. .”

Talking about the impact of this punishment, in the opinion of the above two people, the above-mentioned violations are relatively common, and the banks that have been sanctioned need to rectify the problems that have been exposed one by one.

However, Zhou Maohua pointed out that this punishment also released a signal that the regulatory authorities are determined to maintain a fair, just, regulated and orderly market, protect the legitimate rights and interests of market participants, and promote the high-quality development of the issuance and underwriting market.

Therefore, he suggested that with the rapid development of the domestic issuance and underwriting market, on the one hand, the regulatory authorities need to continue to make up for the shortcomings of the regulatory system, continuously improve the quality and efficiency of supervision, increase the cost of violations of laws and regulations, protect the legitimate rights and interests of investors, and maintain normal market order; On the one hand, financial institutions also need to improve internal management systems, continuously improve internal governance, enhance the compliance awareness of business practitioners, conduct business in accordance with laws and regulations, promote healthy market development, and better serve the real economy.

Economist Song Qinghui believes that the relevant impact of the punishment on the above-mentioned banks should not be underestimated. On the one hand, it will directly affect its brand image, and on the other hand, it also means that industry supervision will become increasingly strict in the future.

He said that the Interbank Market Dealers Association punished many banks at the same time, which shows that the industry’s stubborn diseases are still high and frequent. The institutions do not pay enough attention to related issues, and they lack the awe that the market should have for laws and regulations. It is urgent to supervise and rectify them.

It is worth mentioning that not long ago, on the evening of December 30, 2022, China Merchants Bank, China Guangfa Bank, and UnionPay Commerce were just fined over 134 million yuan in total for violating relevant anti-money laundering regulations. The penalties successively imposed by the central bank and the NAFMII have undoubtedly sounded the alarm for compliance operations for financial institutions at the end of the year and the beginning of the year.

“Successive punishments mean that the regulatory authorities are continuing to tighten the supervision of the banking industry, and the intensity of supervision focusing on ‘risk prevention’ may increase in the future.” In this regard, Song Qinghui proposed that the entire banking industry should closely follow the policy orientation , to identify emerging risks in a timely manner and take active measures to prevent many potential risks from becoming substantive risks.

At the same time, Wang Pengbo also pointed out that the financial industry will continue to be strictly regulated this year, whether it is for the banking, payment or consumer finance industries, and the regulatory regulations are gradually being refined, which puts forward new levels of compliance requirements for institutions. “It is recommended that institutions at all levels should pay attention to compliance work, combine compliance with their own business KPIs, and improve from the system level.”