Jiang Xiyun, the former chairman of China's troubled Hengfeng Bank, has been sentenced to death with a two-year reprieve for corruption and illegal accounting practices, a local court said on Thursday.
The ex-chairman was convicted of corruption, namely moving over 754 million yuan (about $107.74 million) worth of Hengfeng shares into his personal account during 2008 and 2013, receiving bribes, illegally issuing financial notes, and illegally destroying accounting vouchers and accounting books, according to the Yantai Intermediate People's Court.
The verdict means that if Jiang commits no further crimes over the next two years, his sentence will be commuted to life imprisonment, according to Chinese law.
Jiang's defense lawyer told Chinese financial news platform Caixin that they planned to appeal against the court sentence on the basis that the conviction was based on insufficient evidence, and the overdue detention of the defendant.
Previously known as Yantai Housing and Savings Bank, Hengfeng became a joint-stock commercial bank in 2003.
As one of twelve national joint-stock commercial banks in China, it has not disclosed its annual report for two years since 2017 due to management and liquidity issues.
As of 2016, Hangfeng Bank had 1.2 trillion yuan in assets and 430 billion yuan in loans, according to its most recent annual report, with the ratio of its nonperforming loans at 1.78 percent.
The Shandong-based lender said earlier this month that it would issue 100 billion shares through a private placement with Central Huijin Investment Ltd, an investment arm of the country's sovereign fund China Investment Corp (CIC); a local government-backed financial asset management firm; Singapore's United Overseas Bank and other investors purchasing 60 billion, 36 billion, and 4 billion shares, respectively.
China has continuously worked to strengthen supervision, prevent and dissolve financial risks, and restore confidence in smaller lenders. According to the 2019 China Financial Stability Report released by the People's Bank of China (PBC) last month, a sustained effort has been made to advance regulatory reform and shore up weaknesses. High risk institutions such as Baoshang Bank have been dealt with in a stable, orderly manner. The Chinese authorities have been working to stabilize the macro leverage ratio.