Hengfeng Bank’s former chairman was sentenced to death over corruption and other misconduct, according to a local court in China.
Jiang Xiyun was convicted of corruption, receiving bribes, illegally issuing financial notes, and illegally destroying accounting vouchers and accounting books, according to a «Reuters» report citing the Yantai Intermediate People’s Court.
Jiang faces the death sentence with a two-year reprieve. This allows his sentence to be significantly reduced to life imprisonment should no further crimes be committed during the two-year period.
Lifelines
Jiang was the former chairman of Hengfeng Bank which is undergoing a state-led restructuring. The lender had not released an annual report since 2017 due to management and liquidity issues that subsequently led to the staff of the banking and insurance regulator to take over the bank.
More recently, UOB had acquired 1.86 billion more shares in the troubled mid-sized lender for 1.86 billion yuan ($270 million). This marks a reversal following local reports in May this year that UOB had intended to sell its 14 percent stake in Hengfeng Bank acquired in 2008.
Provincial Worries
Worries extend beyond Hengfeng Bank to the broader province which it operates in Shandong. China’s third-largest economy is experiencing increasing distress with six local companies reportedly defaulting or nearly defaulting on $9.7 billion of debt.
Chinese authorities are already responding to growing domestic default risk with the plans to improve the related mechanism. According to a senior official from the People Bank of China, authorities in 2020 will «step up monitoring credit risks, stabilize market expectations, and crack down on the practice of dodging repayment obligations».
