The China Banking Regulatory Commission has fined China Minsheng Bank 27½ million yuan (US$4.2 million) over fake wealth management products, criticising it for lax internal controls and risk management.

A total of 13 employees were fined for selling wealth management products to some 150 affluent retail investors who did not actually exist, the China Banking Regulatory Commission said.

Zhang Ying, the former head of the bank’s Hangtianqiao branch in Beijing, was slapped with a lifetime ban from the banking sector.

The regulator has ordered the bank to rectify its wrongdoings, but did not specify the way in which it ought to compensate investors.

The crooked employees sold the products as an exclusive offering for long-standing private banking clients who had at least 10 million yuan (US$1½ million) in assets at Minsheng.

The investors bought the so-called “innovative” transferred wealth management products from the original investors, according to investment contracts reportedly seen earlier by the South China Morning Post.

Staff told the buyers that the original investors urgently needed cash and were willing to cash out the products which were not yet ready to reap the supposed yields. As a result, the products, which guaranteed at least 4.2% annual returns, were converted into a product with more than 8% annual returns.