China Construction Bank Accused of Misselling Fund, Daily Says
Seven investors in a wealth management product sold by China Construction Bank Corp. (939), the nation’s second-biggest lender, complained to regulators after suffering losses, the National Business Daily reported today.
The savers, from Baicheng city in northeastern Jilin province, filed a complaint with the China Banking Regulatory Commission and the China Securities Regulatory Commission, the newspaper reported, citing one of the petitioners. The investors said they were misled by Construction Bank’s local staff into buying a fund known as Northeast Securities No.3, which required a minimum investment of 100,000 yuan, the newspaper said.
Wealth management products, which typically offer higher yields than deposits, make up about 10 percent of China’s banking system deposits, Barclays Plc wrote in a Dec. 10 research note.
The quality and transparency of the products, China’s biggest shadow banking field, is “worrisome,” Bank of China Ltd. (3988)’s chairman Xiao Gang wrote in an opinion article for the state-owned China Daily newspaper in October.
Two phone calls to the press office of the CBRC went unanswered. The CSRC didn’t immediate respond to a phone call and faxed questions seeking comment. A person reached by phone at Construction Bank’s investor services department declined to comment on the report. A person at Northeast Securities, the manager of the product, declined to provide the contact information of anyone who could comment on the report.
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