THE banking regulator has confiscated illegal income and imposed fines on China Guangfa Bank Co. totalling 722 million yuan (US$109 million) for providing illegal guarantees for defaulted corporate bonds sold through an Alibaba-backed online finance platform, it said Friday.

The fine, the biggest penalty ever handed down by China’s banking regulator, was equivalent to about 8 percent of Guangfa Bank’s 2016 profit, according to calculations based on the bank’s annual report.

The high-yielding bonds were issued privately by southern Chinese phone maker Cosun Group and sold through Zhao Cai Bao, an online platform run by Ant Financial Services Group, the finance affiliate of e-commerce giant Alibaba Group Holding Ltd.

When the bonds defaulted in December last year, Ant Financial asked Zheshang Property and Casualty Insurance Co., which wrote insurance policies on the bonds, to repay investors.

But the insurer released documents carrying Guangfa Bank’s official seals and said that the bank’s Huizhou branch had promised to guarantee its insurance policies for the bonds.

Guangfa Bank said at the time that the guarantee documents, official seals and personal seals presented by the insurer of the bonds were “all fake” and that the bank had reported the matter to the police.

In Friday’s statement, the China Banking Regulatory Commission (CBRC) said the fraud, involving 12 billion yuan and more than 10 financial institutions, was a “collusion” between employees at Guangfa Bank’s Huizhou branch and Cosun to conceal the bank’s huge amount of nonperforming assets and operational losses. (SD-Agencies)