In late July 2026, the Shanghai Bureau of the National Financial Regulatory Administration imposed a million-yuan fine on the Shanghai branch of China Zheshang Bank Co.,Ltd. (601916). For a branch with 205.7 billion yuan in assets and 1,113 employees, a 100 million yuan penalty is not substantial in itself. However, it is notable that this marks the second time the branch has been penalized for similar issues within a short period.
On July 27, the Shanghai Bureau disclosed an administrative penalty (Hu Jin Fa Jue Zi [2026] No. 96) against the Shanghai branch for "seriously violating prudent operation rules in factoring financing business credit management" and "seriously violating prudent operation rules in employee behavior management," resulting in a fine of 1 million yuan. The Shanghai branch is a core unit of CZBANK in the Yangtze River Delta region, overseeing 16 sub-branches, with assets of 205.697 billion yuan and 1,113 employees as of the end of 2025, holding a significant position in the group's business operations. The 2025 annual report shows that the bank's current staff supervisor, Ms. Chen Zhong, also serves as Deputy Party Secretary and Vice President of the Shanghai branch, and board members have conducted field research at the branch. Despite this, compliance issues at the branch have persisted.
This is not the first time the branch has been penalized for similar business issues. On January 27, 2025, the Shanghai branch was heavily fined 16.8 million yuan for 15 violations (Hu Jin Fa Jue Zi [2025] No. 57), including "serious violation of prudent operation rules in trade finance business," "inadequate review of trade background in bill business," and "inadequate management of abnormal employee behavior." Seven responsible individuals, including Xue Liang and Zhao Huijing, were either warned or fined. Judicial cases provide further concrete examples. A commercial bribery case concluded in May 2025 by the Shanghai Jing'an District Court showed that a former general manager of the branch's business development department, Wang, used his authority to select partners in supply chain finance and factoring financing businesses, accepting cash "kickbacks" totaling over 3.27 million yuan from Ma and Zheng through channels including Jinyuan Dingxin Commercial Factoring Co., Ltd. The fact that a key position manager handled large amounts of cash multiple times over more than a year without timely detection by the internal risk control system indicates insufficient power checks and balances in related business processes. The regulator's reference to "seriously violating prudent operation rules in employee behavior management" has corresponding real-world examples.
The Shanghai branch's experience is not unique. Looking at million-yuan-level fines alone, several branches of China Zheshang Bank Co.,Ltd. have been penalized since 2026: in February, the Tianjin branch was fined and confiscated 1.1816 million yuan for foreign exchange violations; in April, the Jinhua branch was warned by the People's Bank of China, with illegal gains confiscated and a fine of 1.693 million yuan; in May, the Qingdao branch was fined 1.95 million yuan for conducting business prohibited by the head office and inadequate trade background review. This dense series of regulatory penalties coincides with a tightening policy window for supply chain finance. On June 15, 2025, the People's Bank of China and five other departments implemented the "Notice on Regulating Supply Chain Finance Business to Better Guide Supply Chain Information Service Institutions in Serving SME Financing" (Yin Fa [2025] No. 77), which explicitly requires commercial banks providing accounts receivable electronic certificate financing services to "strictly review trade background materials" and "not outsource key links," setting a two-year transition period. Annual report data shows that as of the end of 2025, CZBANK's cumulative supply chain finance financing scale exceeded 1.1 trillion yuan, serving over 4,000 core enterprises and more than 98,000 upstream and downstream enterprises. At the midway point of the transition period, the underlying risk control mechanisms of such a large-scale supply chain finance business will face stricter scrutiny.
Beyond external penalties, internal accountability is also being intensified. According to the 2025 annual report, the bank implemented performance-based salary clawbacks for 970 personnel last year, totaling 13.6873 million yuan. With a total workforce of 25,016 employees, this means nearly 4% of staff had their salaries clawed back due to compliance issues or risk responsibilities. The simultaneous occurrence of broad internal clawbacks and external regulatory penalties indicates that compliance issues accumulated during earlier business expansion are being concentratedly exposed and addressed. On February 13, 2026, China Zheshang Bank Co.,Ltd. was the only new entrant included in the first group of systemically important banks, facing an additional 0.25% capital surcharge. Combined with the reality that the bank's core Tier 1 capital adequacy ratio dropped to 8.26% in the first quarter of 2026 and its capital buffer is relatively thin, the new status as a systemically important bank further increases the urgency of governance repair and internal control reconstruction.
Beyond compliance issues, CZBANK's financial performance is also under pressure. In 2025, the bank experienced its first "double decline" in both revenue and net profit since its establishment in 2004: full-year operating revenue was 62.514 billion yuan, down 7.59% year-on-year, and net profit attributable to the parent company was 12.931 billion yuan, down 14.85% year-on-year. Amid a persistently narrowing industry-wide net interest margin, declining asset-side pricing power further squeezed profitability. Alongside weak profit growth, fluctuations in asset quality are increasing pressure. Retail business risks have risen, with the non-performing loan ratio for personal loans increasing from 1.78% at the end of 2024 to 2.45%. Facing bad debt pressure, the bank's provision coverage ratio fell to 155.37% at the end of 2025, down 23.30 percentage points from the end of the previous year, indicating a shrinking risk buffer. Meanwhile, capital adequacy ratios are also declining. In the first quarter of 2026, although revenue and net profit turned slightly positive, the core Tier 1 capital adequacy ratio fell 14 basis points from the beginning of the year to 8.26%. With its inclusion in the first group of systemically important banks in February, the bank now needs to meet an additional 0.25% capital surcharge. With a limited capital buffer, balancing scale expansion, profit recovery, and compliance rectification has become a core challenge for the new Chairman, Chen Haiqiang, and President, Lyu Linhua. In response to the latest fine on the Shanghai branch, China Zheshang Bank Co.,Ltd. stated externally that "rectification has been completed." However, whether the rectification will stop at individual case handling or address mechanism-level issues like power checks and balances in key positions remains to be seen through subsequent regulatory review. The fluctuations in financial data and recurring compliance issues indicate that the challenges for this newly designated systemically important bank during its strategic adjustment period are not yet over.
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