The China Banking and Insurance Regulatory Commission has started investigations into Bank of China’s oil-linked debacle.
The CBIRC will look into Bank of China’s blunder as investors took losses of over $1 billion last month due to trade settlements made below zero after crude oil plunged into the negative territory.
According to the mainland regulator, 80 percent of the cases involving losses on the oil-linked product have been settled by Bank of China thus far. The state-owned lender is also undergoing self-examination of its product design, business strategy and risk controls.
Legal Worries
Losses aside, there are reported concerns about the legality of the product itself – believed to be endorsed by the CBIRC – due to a rule prohibiting individual investor access to overseas futures trading. Enraged investors have sought help from local law firms including Beijing Weinuo Law Firm and Beijing DHH (Shanghai) Law Firm which claimed to represent over 700 investors.
Meanwhile, Bank of China has already offered to should all of the losses below zero and up to 20 percent of the original investments. The deal is estimated to total 6-7 billion yuan ($1.84 billion) if all loss-makers decide to settle under these terms.
