ICBC New Zealand breaches conditions of bank registration again

Don Brash says the bank is figuring out a way to make sure it does not blot its copybook again.
David White

Don Brash says the bank is figuring out a way to make sure it does not blot its copybook again.

Chinese banking giant ICBC is in hot water with the Reserve Bank after again breaching its conditions of registration.

The local arm of China's state-controlled banking behemoth, the Industrial and Commercial Bank of China, received a New Zealand banking licence in late 2013.

Earlier this year it admitted the Reserve Bank had taken it to task for failing to get clearance before hiring a compliance officer.

ICBC NZ's latest disclosure statement for the three months to March 31 reveals it has fallen afoul of the regulator once again.

This time the breach came from being over-exposed to its parent company, which is the biggest bank in the world.

Chairman Don Brash said a customer had credited a large sum to an overseas ICBC account before it was remitted to New Zealand.

"Technically, because that was an account we had with the parent bank, we were in breach for six days," he said.

"It's not easy to know in advance what your customers will credit to your account, but we're keen to avoid that and we're working on a way of doing that currently."

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Brash agreed that a second breach in as many quarters was "absolutely not a good look at all".

Both he and new chief executive Hou Qian had personally travelled to Wellington to discuss it with the Reserve Bank.

While the central bank was "not happy", it had not issued any penalty or sanction as of yet, he said.

Brash said Qian was doing a great job so far in the chief executive role and was keen to ensure the conditions of registration were not breached again.

READ MORE:

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*Shipley v Brash: Who earns more Chinese bank cash?

Banks can face fines of up to $1 million or in the worst-case scenario have their licences cancelled for breaching their conditions of registration.

However, several lenders that have made minor "technical" breaches in recent years have escaped sanction.

ICBC NZ's latest accounts show it made a $327,000 profit in the first three months of the year, following a $3 million loss posted for the 2014 calendar year.

It now has $118.4m of lending on its books, primarily commercial and syndicated loans with a smattering of mortgages.

Brash's role at ICBC earned him $65,000 in director's fees last year.

He is one of several prominent ex-National Party politicians to take roles with the major Chinese banks that have entered the New Zealand market in the last two years.

Former prime minister Dame Jenny Shipley chairs China Construction Bank's New Zealand arm, while Ruth Richardson and Chris Tremain are directors of Bank of China (NZ).

Richardson is the free-marketeer who delivered the infamous "mother of all budgets" as finance minister in 1991, and Tremain was a Napier electorate MP and cabinet minister before retiring from politics.

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