Stockbroker fined for criticizing bank profits

(Xinhua) Updated: 2014-05-14 16:59

BEIJING - A Chinese stockbroker has been docked two months' salary - nearly 1 million yuan ($164,000) - for comments he made about a bank's huge profits

Wang Dongming, chairman of CITIC Securities, the largest brokerage firm in China, made the barbed remarks at a finance forum in Beijing on Saturday. Wang believes that while financial services are quite poor, institutions' profits are quite high, and thus funds have drained from the real economy into the finance sector.

To drive his point home, Wang cited a private talk with Yang Kaisheng, former president of Industrial and Commercial Bank of China (ICBC), the largest state-owned bank in China, when he told Yang that "if ICBC reported profits of 200-300 billion yuan, all the country would condemn it".

Video records showed the comment won applause.

On Monday CITIC Securities issued an internal circular fining the board chairman two months' salary for the comment. His annual salary is almost 6 million yuan and the fine will be nearly 1 million. Meanwhile, rumors spread that ICBC was canceling its cooperation with the broker.

The circular asked its staff to be cautious in public speeches and not to hurt clients' interests and feelings. The company encourages free speech, but clients should be considered, and staff should avoid citing clients' names when sensitive topics are involved, the statement said.

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Most netizens showed support for Wang. "The price to speak the truth: two months' salary," said netizen Zhangshiruhong. "I can do it, but you can not say it," said another netizen Menglidie. "To show support for Wang Dongming, I will buy stocks of CITIC Securities," said netizen LY_IS_GOOG.

Stocks of CITIC Securities opened slightly higher on Wednesday.

The context for Wang's remarks is China's problems in direct financing. Indirect financing made up more than 80 percent of the total, and the banking sector's assets took more than 90 percent of the total finance assets, said Shang Fulin, head of the China Banking Regulatory Commission, in March. This indicates that the finance system relies too much on the banking sector. The imbalance between direct and indirect financing will concentrate risk at the banking sector and make it hard for the real economy to raise funds.

Besides Wang, Liu Shiyu, vice governor of the People's Bank of China, the central bank, also touched upon the problems at the same forum. "If every one in the society is eager to engage in financing businesses, it may be a kind of fever that has influenced brain's thinking capacity," Liu said.

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