ICBC share price drops after system breakdown report

The share price of Industrial and Commercial Bank of China (ICBC), the world's largest bank by market capitalization, fell slightly Wednesday after a report revealed a computer breakdown at the bank which halted transactions and drew complaints from investors and brokerage firms.

The company's share price slipped by 0.76 percent to close at HK$5.2 ($0.67) on the Hong Kong bourse on Wednesday. The dual-listed company's share in the Shanghai Stock Exchange ended flat.

The breakdown, which happened on July 16 and prevented 90 million yuan ($14.6 million) from being transmitted from investors' brokerage accounts to their bank accounts, resulted in complaints from investors and brokers but also revealed deep dissatisfaction over the third-party transaction settlement depository scheme, China Securities Journal (CSJ) reported on Wednesday.

China introduced the scheme back in 2007 to safeguard the interests of investors after some brokerages were found to have embezzled from investors' investment accounts.

Under the current scheme, a stock investor has to first transfer his money from his bank account to his brokerage account before he is able to buy any stocks. The investor then needs to do the reverse to channel his money back into his bank account for personal use.

A PR staff of ICBC, who declined to be named, confirmed to the Global Times that its system had experienced a problem on July 16.

The CSJ report said over 2,000 investors and more than 80 brokerage firms were affected by the transaction suspension, obstructing transactions worth 90 million yuan, citing statistics from a "relevant department."

China had 115 brokerages as of the end of 2013, according to the China Securities Regulatory Commission.

Although the settlement errors were corrected afterward, the fact that it caused delays in the transactions raised complaints from some investors.

"Some complained the money was meant to repay debt and [the delay caused them to] incur extra interest, while others said the money was intended as payment for due medical bills," the CSJ report cited an unnamed brokerage professional as saying.

ICBC did not cause any losses to investors and brokerage firms, the PR staff told the Global Times on Wednesday.

Many brokerage firms complained that under the current framework of the third-party transaction scheme, banks have an advantage in defining the accuracy over transaction data, and the brokerage firms have to face investors' complaints even if the fault lay with the banks, the CSJ report said.

Li Daxiao, director of research at Shenzhen-based Yingda Securities, said it is time to renegotiate the terms concerning the third-party depository scheme.

"After years of regulation, the risk management of the brokerages has been improved substantially," Li told the Global Times Wednesday.

Experts said banks and brokerage firms should also work on creating an emergency scheme to protect investors.

"There should be a cooperative spirit in the partnership of banks and brokers because this is not short-term business, but rather business for the long term. Discussing a scheme that better protects the interests of investors will lead to a win-win situation," Li said.