SHANGHAI: China Merchants Bank Co slumped in Shanghai and Hong Kong markets yesterday after the surprising departure of its President Tian Huiyu, who spent nearly nine years building the lender into the nation’s king of retail banking.
Tian, 56, was removed from his current role and subject to further assignment with immediate effect, the Shenzhen-based bank said in a statement late Monday.
Wang Liang, chief financial officer and board secretary of Merchants Bank, will be in charge in the interim, according to the statement.
Shares of Merchants Bank dropped 3% in Shanghai yesterday early trade, adding to Monday’s 7.4% slump on unverified social media reports that Tian was assisting a probe.
The stock has lost 14% this year, making it the worst performer among publicly-traded banks on the mainland.
About US$19bil (RM80.84bil) of market value was wiped out in two days.
Tian didn’t join the board meeting held on Monday due to personal reasons, the lender said in the statement, adding the decision won’t affect its operations.
Tian’s current term is scheduled to end in June. He will join the parent firm China Merchants Group as a deputy head for its financial business division, Cailian reported late Monday, without citing anyone.
The abrupt move comes as China has stepped up its efforts to root out corruption in its US$60 trillion (RM255.27 trillion) finance sector to keep systemic risks in check, as the nation battles a slowing economy, a cash-strapped real estate sector and worsening Covid outbreaks.
The top disciplinary body sharply criticised more than two dozen financial regulators and state banks in February, saying they had common problems including prominent corruption around key positions and areas.
Tian has been helming Merchants Bank since May 2013.
Prior to that, he held various roles at other Chinese lenders including Bank of Shanghai Co and once served as a secretary for vice- president Wang Qishan when the latter headed state-owned China Construction Bank Corp in the 1990s.
Unlike most Chinese lenders that relied heavily on wholesale lending and corporate clients, Merchants Bank, based in the southern technology hub of Shenzhen, has benefited from its focus on retail banking.
That strategy had sheltered it from the nation’s economic slowdown in the past few years and earned it a valuation premium over peers. Even after Monday’s drop, the bank still trades at about 1.5 times its book value, more than double the average for its peers listed on both mainland and Hong Kong markets.Merchants Bank reported a 23% increase in net income last year, its fastest growth since 2012.
The lender’s total assets had more than doubled since end-2013 to 9.25 trillion yuan (US$1.5 trillion or RM6.38 trillion) by December under Tian’s leadership. —Bloomberg