By Adam Jourdan
SHANGHAI (Reuters) – Shares in China Huarong Asset Management Co Ltd <2799.HK> fell more than 10 percent on Friday after the large state-owned bad debt manager confirmed its chairman Lai Xiaomin, who is under investigation for alleged corruption, had stepped down.
Reuters reported earlier this week, citing sources, that a senior banking regulator official would take the helm at Huarong after China’s anti-corruption watchdog launched a probe into Lai for “serious discipline violations”, a euphemism for graft.
Huarong said in a statement to the Hong Kong stock exchange late on Thursday that Lai’s departure “will not cause any adverse impact to the business.”
Investors, however, sold down the stock sharply when trading resumed on Friday morning after being halted earlier this week.
The firm’s Hong Kong-listed shares fell 10.7 percent to hit their lowest level since January last year in a slightly firmer wider market <.HSI>.
Huarong said that Wang Zhanfeng, head of the Guangdong branch of China’s banking regulator, had been lined up as its new chairman. Li Xin, chief supervisor of China Orient Asset Management Co Ltd, would be named president of Huarong.
The firm hit the headlines this year after building up a 36 percent stake in a key unit of embattled private energy company CEFC China Energy which is acquiring a $9.1 billion stake in Russia’s oil major Rosneft
The investigation into Lai makes him the latest in a long line of top Chinese executives coming under fire as China looks to rein in risks in the financial sector, targeting riskier lending practices and high levels of corporate debt.
Huarong Investment Stock Corp Ltd <2277.HK> and Huarong International Financial Holdings Ltd <0993.HK> – which also earlier suspended trading of their shares – both dropped over 10 percent in early morning trading on Friday.
(Reporting by Adam Jourdan in Shanghai and Donny Kwok in Hong Kong; editing by Richard Pullin)