The 48-year-old banker told New York-based JPMorgan that he wanted to retire, according to an internal memo obtained by Bloomberg News today. Frank Gong was named chairman of China investment banking in the message from Therese Esperdy, co-head of Asia-Pacific banking at the firm. Marie Cheung, a spokeswoman in Hong Kong, confirmed the contents of the memo.
Fang’s impending departure comes amid an investigation into JPMorgan’s Asian hiring practices. U.S. authorities are examining whether the firm employed people in Asia so that their relatives in government would steer business to the bank, people with knowledge of the probes have said.
Fang joined JPMorgan in August 2001 and was a former vice president of Beijing Enterprises Holdings Ltd., an investment company controlled by the government of China’s capital. He became head of JPMorgan’s China investment-banking business in 2007 and was made vice chairman for Asia investment banking in 2009.
The banker submitted his resignation last week as he wants to spend more time with his family, a person with knowledge of the matter said.
U.S. prosecutors were given e-mails written by Fang in which the banker supported the hiring of China Everbright Group Chairman Tang Shuangning’s son, the Wall Street Journal reported earlier today, citing people it didn’t identify. Those e-mails also highlighted the potential for doing business with the state-backed conglomerate, the newspaper said.
Fang, who has become a key figure for U.S. investigators, hasn’t been accused of any wrongdoing, the Journal said.
JPMorgan, which was the world’s biggest investment bank by fees last year, said in August that the Securities and Exchange Commission had sought information on its employment of certain people in Hong Kong and client relationships. The bank hasn’t been charged with any wrongdoing.
The SEC has also asked several other global investment banks for information about their hiring practices, according to four people familiar with the matter.
The probes have posed hurdles to JPMorgan’s involvement in at least two recent investment-banking transactions. The bank decided to quit China Everbright Bank Co.’s Hong Kong share sale in November because the investigation delayed an internal approval process, according to two people with knowledge of the matter. The $3 billion deal was the largest first-time offering by any company in Hong Kong last year.
In January, JPMorgan bowed out of Tianhe Chemicals Group’s IPO as questions arose over the firm’s previous employment of the daughter of Tianhe’s chairman, according to two people with knowledge of the matter. She left the bank in August of last year, one of the people said.
Regulators are probing the hirings to determine whether JPMorgan violated the Foreign Corrupt Practices Act of 1977, which makes it illegal to provide payments or benefits to government officials to win business. U.S. scrutiny of the firm began in Hong Kong and expanded to countries across Asia, looking at interns as well as full-time workers, people familiar with the inquiries have said.
Investigators questioned Gaby Abdelnour, JPMorgan’s former Asia-Pacific head, about his knowledge of the firm’s hiring program, a person briefed on the matter said two months ago. Abdelnour hasn’t been accused of wrongdoing.
The banker, who stepped down at JPMorgan in 2012 and later worked as a senior adviser at Bain Capital LLC, was met by FBI agents while traveling through a New York-area airport late last year and then interviewed, said the person, asking not to be named because the probe isn’t public.
Abdelnour had been appointed in July 2006 to run JPMorgan’s Asia-Pacific business from Hong Kong, reporting to then-investment bank co-heads Steven Black and William Winters.
Following Fang’s departure, Brian Gu and Jing Zhao will become co-heads of investment banking for China, according to the message from Esperdy today. Zhao will also maintain her current position as head of the financial institutions group for emerging Asia.
The firm earned 50 percent more revenue from investment-banking fees in the Greater China region last year, driven by operations on the mainland, according to Esperdy.
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