BEIJING (BLOOMBERG) - China's top anti-graft watchdog has placed the chairman of China Life Insurance under investigation in a surprise move, sending the shares of one of the country's largest insurers down the most in almost four weeks in Hong Kong.
Mr Wang Bin, the most senior finance industry executive caught up in an anti-corruption drive launched in October last year, is "suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and investigation", the China Central Commission for Discipline Inspection said in a statement on Saturday (Jan 8), without disclosing more details.
China Life's shares sank as much as 2.5 per cent before paring earlier losses to trade 1.8 per cent lower at HK$13.20. Its yuan-denominated shares fell as much as 3.4 per cent in Shanghai.
The move to investigate the head of the nation's biggest life insurer, with a market capitalisation of around US$110 billion (S$149 billion), underscores how Chinese President Xi Jinping is pressing ahead with a drive to root out corruption.
A nationwide anti-graft crackdown focused on financial institutions and regulators has taken down more than 20 officials since its start in October as the authorities step up scrutiny over the nation's US$54 trillion financial system.
Mr Wang is the first high-level financial industry official to be hit by the campaign this year, according to the official Securities Times.
China Life said it will cooperate with investigations and supports Beijing’s actions to cleanse the country's political and financial systems, according to a statement on Saturday. The company will hold a board meeting in the near future to decide on an acting chairman, it said in a filing to Shanghai Stock Exchange on Sunday.
The news is expected to cast a shadow over the company's share price, as investors may have concerns over the insurer's corporate governance as well as the potential business disruptions brought by the leadership change, Citigroup analysts wrote in a note.
But the probe should have "manageable impact" on China Life's operations, which have been mainly led by other executives, as Mr Wang, 64, has approached retirement, said the analysts, whose target price for China Life's Hong Kong-listed stock is HK$22.
Day-to-day operations depend more on senior management, which has been largely stable, according to Bloomberg Intelligence analyst Steven Lam. The chairmanship, where appointments depend on the government and Communist Party, rotates every few years, he wrote in a note.
Mr Wang previously held posts in China Taiping Insurance Holdings and Bank of Communications before chairing China Life. He had also worked at the central bank.