A CHINESE regulator said yesterday it had barred traders dealing in interbank transactions at Ping An Bank Co. and China Merchants Bank for a year after they mishandled a transaction last week.

The National Interbank Funding Center, China’s interbank trading platform and regulator, said in a notice that the two Shenzhen-based lenders made an overnight pledged repo transaction Tuesday last week at a lending rate of 0.09 percent, which was well below the more than 1 percent average rate in recent months.

The “abnormal” transaction was due to operational errors of traders from the two midsized banks, the regulator said, asking them to enhance risk control and internal management. It didn’t specify how many traders were involved.

The interbank pledged repo rate reflects the cost of borrowing between banks and has recently drawn regulatory attention following the government’s takeover of Inner Mongolia-based Baoshang Bank on May 24 due to “serious” credit risks.

Baoshang Bank’s takeover drove up lending rates in the interbank market, sparking default concerns.

(SD-Agencies)