Huaxia Bank has blamed an employee at a Shanghai branch for selling a wealth management product without permission, following public outcry that the product could not repay investors.
The deposit products, issued by the Zhongding Wealth Investment Center, were sold by an employee at Huaxia's Jiading branch, in a Shanghai suburb, Huaxia said in a statement late on Sunday.
Busy cutting ties with the employee, Huaxia claimed that he had been dismissed. Nevertheless, the bank did not mention how much money might be involved. It said only that it was "aware" of reports that the investments could not be repaid when the product matured, but Huaxia did not confirm those reports.
In a separate statement on Monday, Huaxia said the products the employee sold were four Zhongding-issued instruments, available since 2011.
Chinese banks offer wealth management products that trumpet higher investment returns than regular savings accounts to attract and retain wealthy depositors.
Typically, each bank generally sells a number of financial instruments it has approved. In most cases, investment products packaged by private equity firms, like the one issued by Zhongding, are not routinely offered by bank branches.
Critics worry that the wealth management products are poorly regulated and might potentially conceal overlapping obligations
Huaxia, which distributes other wealth management products, insisted those products are operating normally and are up to date in their payments.
According to local police, investigation into the case is still under way.