Tougher regulation on Chinese banks could trigger stock market panic

Tightening regulation and an increasing number of criminal investigations into Chinese banks, and particularly their bill-financing businesses, could reduce liquidity in money markets and trigger a panic in stock markets, according to reports. This follows the emergence of a RMB 969m ($147m) fraud reported at China Citic Bank, and a similar fraud reported by Agricultural Bank of China last month, in which two employees illegally sold RMB 3.9bn ($590m).

Police have launched investigations into fraud cases at Agricultural Bank of China and China Citic Bank