Bank of China's Class A shares declined 0.93% on Friday, closing at 5.35 yuan in Shanghai trading. The drop outpaced the broader SSE Composite Index, which fell 0.25%. Year-to-date, the stock has retreated approximately 6.6%.
Governance Concerns Surface
State media disclosed that former vice president Lin Jingzhen has been expelled from the Communist Party due to "serious violations of discipline and law," a common official phrasing often associated with corruption investigations. Lin had stepped down from his role at the bank in 2025. The report did not provide specific details regarding the alleged misconduct.
This development introduces fresh governance uncertainty for one of China's major state-owned lenders. Investors are now assessing whether this remains an isolated personnel matter or could trigger broader regulatory scrutiny affecting the bank's leadership and operations.
Broader Sector Pressures
The banking sector faces persistent margin compression amid China's economic slowdown and subdued credit demand. Analysts note that net interest margins (NIM) are likely to remain under pressure throughout 2026 without a meaningful recovery in loan appetite.
Beijing continues to push major financial institutions to strengthen their capital bases. Last March, Bank of China joined other leading lenders in announcing plans to raise substantial funds through private placements to reinforce core capital.
Market participants will monitor whether the Lin case affects investor confidence as they await the bank's annual results, scheduled for release on March 30. The immediate focus will be on Monday's trading session to gauge whether the stock stabilizes or remains under pressure.