Risk management issues at Chinese bank, branch lead to enforcement action; former MD banker prohibited

Enforcement actions against a Chinese bank and its New York branch, and against a former Maryland banker, were revealed Tuesday by the Federal Reserve.

The Commercial Bank of China Ltd., of the People’s Republic of China, and Industrial and Commercial Bank of China Ltd., New York Branch, entered into a consent agreement that the Fed said resulted from risk management deficiencies revealed during a recent examination.

Among other things, the bank and its branch agreed to strengthen senior management oversight of risk management and internal controls of the branch in a manner that is acceptable to the Federal Reserve Bank of New York, according to the agreement filed by the Fed. A plan to improve monitoring and managing of credit risk at the branch must also be developed by the bank.

The bank and branch have 60 days to submit plans for both.

In the other, separate action, the Fed said it had issued a consent prohibition order against Laurence E. Bensignor, a former employee (now retired) of Eagle Bancorp, Inc., and EagleBank, of Bethesda, Md., for unsafe and unsound banking practices. The Fed said Bensignor, a former executive vice president and general counsel of the company and bank (from 2012 to 2018) “engaged in unsafe and unsound banking practices by failing to ensure that he disclosed, in accordance with the Bank’s Code of Conduct and policies relevant to insider lending, certain information regarding the participation of various parties in certain transactions of the Bank.”

The former banker is prohibited from working at or “participating in any manner in the conduct of the affairs” of any federally insured financial institution or their holding companies, it said.

Federal Reserve Board issues enforcement actions with Industrial and Commercial Bank of China Ltd. and Industrial and Commercial Bank of China Ltd., New York Branch, and a former employee of Eagle Bancorp, Inc. and EagleBank