On August 23, Mrs. Xu from Hangzhou made headlines by purchasing a 1 million yuan (RMB) wealth management asset plan through the China Merchants Bank app and receiving back only 11,600 yuan. This news has sparked public attention due to concerns over the irregularities in China Merchants Bank’s wealth management practices, which had previously faced penalties for non-compliant disclosures.
According to reports from mainland media outlet “Epoch Weekly,” a dispute arose as a result of investors suffering financial losses in wealth management and subsequently choosing to take legal action against China Merchants Bank and China Merchants Wealth.
Recent court documents revealed that Mrs. Xu in Hangzhou had used the China Merchants Bank app to purchase a 1 million yuan investment product from Xindingming in the form of a wealth management plan. She made a direct payment of 1 million yuan through the app, along with an additional 10,000 yuan in processing fees, totaling 1.01 million yuan.
Despite this, only 11,600 yuan was returned to Mrs. Xu, leading her to file a lawsuit against China Merchants Wealth and Xindingming for the difficulty in retrieving her principal.
Several judicial documents indicated that since June 2019, Xindingming’s private equity funds had started facing issues of being unable to meet maturity payments. Out of the 27 products managed by Xindingming, 19 had been liquidated by 2022, while the remaining 8 were still pending liquidation.
Among these 8 unliquidated private equity funds, 7 were under the custodianship of China Merchants Bank, including the “Xindingming Culture Investment Fourth Period Private Equity Fund” mentioned in Mrs. Xu’s lawsuit materials.
Furthermore, China Merchants Wealth was also embroiled in financial disputes with Heyhey Films, involving an amount of 148 million yuan plus corresponding interests.
China Merchants Wealth had suffered losses in various high-risk film and cultural investment projects, with entities like Xindingming, Qilin Yingfeng, and Jizhong Culture being affected.
Since 2020, China Merchants Wealth had encountered difficulties with capital withdrawals and prolonged legal disputes in certain film and cultural projects it had invested in. For instance, in the Guangda MPS incident, where China Merchants Wealth invested 2.8 billion yuan and became the primary investor, resulting in the inability to recover a substantial principal amount.
Despite facing numerous risks, China Merchants Wealth maintained a leading position in terms of asset management scale among fund subsidiaries, with its participation in private equity products encompassing various strategies, such as serving as a limited partner directly and utilizing affiliated private equity management companies as general partners. However, these complex structures and collaborative models had increased the challenges of regulation and risk control.
Apart from legal entanglements, China Merchants Bank had also incurred multiple penalties in recent years.
According to the China Banking and Insurance Regulatory Commission, China Merchants Wealth Asset Management Co., Ltd. was fined 8.5 million yuan for inadequate asset identification and non-compliant information disclosure. Similarly, China Merchants Bank Co., Ltd. was fined 3.5 million yuan for the same reasons, totaling 12 million yuan.
Incomplete statistics revealed that in 2023, China Merchants Bank had accumulated fines exceeding 45 million yuan for various violations. In 2022, fines of over 60 million yuan were imposed on China Merchants Bank for anti-money laundering and credit-related violations. In 2021, China Merchants Bank received at least 14 penalty notices, totaling nearly 80 million yuan in fines.