Chinese private banks may be contravening regulatory policy by continuing to distribute some products of Anbang Insurance Group, according to press reports.

Cijing, the Chinese business jounal, has revealed that the insurance group's chairman, Wu Xiaohui, has been taken into police custody in relation to the group's risk-taking in debt-ridden investments overseas. The New York Times cofirmed this later. Anbang has 30,000 employees and US$100-294 billion in assets (reports vary) worldwide. It also owns two listed Chinese banks: China Merchants Bank and Minsheng Bank, for whose liquidity the markets are now fearing.

The insurer's life office sells 88% of its policies through private and other banks, which in turn have been instructed to stop selling some or all of them, according to Bloomberg. The Government - worried in general about an economy dependent on too much credit - is clamping down on risky investments that might lead to capital shortfalls at financial institutions and believes that the sale of these policies spreads unnecessary risk from the insurance carrier (whose highly debt-ridden acquisitions of luxury property abroad have fallen under the baleful gaze of the China Securities Regulatory Commission) to the banks' customers.

Wu Xiaohui's detention might also have something to do with allegations from last year that the People's Bank of China has been investigating Anbang's compliance with anti-money-laundering rules. Bloomberg also reports that, at the same time, the Government stopped various business associations from signing new deals with it. Reuters, meanwhile, believes that the Government's main concern is to counter corruption and break up cosy relationships between insurance carriers, banks and powerful party officials. It also reports that CITIC Private Bank in Hangzhou has suspended sales of almost all Anbang products.

Chinese regulation is well-known for its opacity and the nature of the banking ban is therefore slightly unclear. Some bank staff have told Reuters that they have stopped selling various policies, and Bloomberg reports that six big banks have instituted a blanket ban, while Wu himself has suggested that banks are still offering plenty of policies to their HNW clients.

The detention of bank directors for questioning is not an uncommon occurrence in China at the moment. President Xi Jinping has been pursuing a much-publicised anti-corruption campaign since 2013 and has recently vowed to 'de-risk' the Chinese financial system also. There is no stain on Wu's character so far, but the ban on banks selling his firm's policies is reportedly dealing a heavy blow to its revenues.