China Detains Investment Bankers, Takes Passports in Corruption Sweep

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China,Chinese Authorities,China

(Bloomberg) -- China is turning up the heat on its army of 8,700 investment bankers. Most Read from BloombergHow Americans Voted Their Way Into a Housing...

After being forced to take big pay cuts and adhere to other belt-tightening measures under President Xi Jinping’s years-long common prosperity campaign, the country’s dealmakers are now in the crosshairs of the nation’s top graft buster.

The brokerages have tightened approvals for overseas trips and told staffers that they also need to get approval if they wish to resign, the people familiar added. Those approved for business travel have to do so with a co-worker, and activities outside of pre-approved itineraries would be restricted, according to one of the people.

The late August arrest of of Jiang Chengjun, who was a deputy general manager at Haitong overseeing investment banking, helped accelerate the deal’s timing, according to a person familiar with the matter. On Aug. 28, Haitong reported a 75% drop in first-half profit to 953 million yuan, in part because of declines in investment banking, trading and institutional client services revenue.

China had more than 8,700 investment bankers as of early September across 147 brokerages. Many of them are involved in capital-markets activities including IPOs and follow-on share sales. The combined revenue of securities firms in the country amounted to 203.3 billion yuan in the first half, official data showed, down 9% from a year earlier.

Sun Jianbo, president and founder of Beijing-based asset manager China Vision Capital, said the industry consolidation and regulatory crackdown suggest China’s going in the right direction to reshape its investment banks which had largely offered “inadequate” services.

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