Top banker exits China's CICC due to brother's regulatory role, sources say

BEIJING/HONG KONG (Reuters) -A top executive who left investment bank China International Capital Corp (CICC) is set to join sovereign wealth fund CIC to avoid a potential conflict of interest as his brother heads the securities regulator, six sources said.

China has long vowed tougher discipline of leaders and officials, and the latest move comes against the backdrop of sweeping changes to top regulatory bodies made in recent years by President Xi Jinping so as to improve supervision.

Wu Bo, most recently the president and CFO of state-owned CICC, is the younger brother of Wu Qing, who took the helm of the China Securities Regulatory Commission (CSRC) in February, said the sources with knowledge of the matter.

The primary watchdog of all brokerages in China, including CICC and foreign banks' securities ventures, CSRC supervises the $10.5-trillion stock market and various capital markets activities.

The sources spoke on condition of anonymity because the matter is a sensitive one.

The CSRC, CICC, Wu Bo and Wu Qing did not respond to Reuters' requests for comment. CIC declined to comment.

Headquartered in Beijing, CIC was founded by the central government in 2007 to help the world's second-largest economy earn a higher return on foreign exchange reserves, and had total assets of $1.24 trillion by the end of 2022.

In a filing on Wednesday, CICC said that Wu Bo, who joined the bank in 2004, had stepped down as president with immediate effect after less than half a year in the role.

He would also no longer serve as CFO or a member of the management committee due to "work changes", the bank added, without giving further details.

China's law on civil servants, which covers the CSRC, bars public servants who are immediate family members, including siblings, from working in posts with direct superior and subordinate relationships.

Preparations for Wu Bo's departure from China's oldest investment bank started soon after his brother, nicknamed the "broker butcher", was appointed as the CSRC head in an unexpected move amid a market rout, three of the sources said.

Wu Bo, 46, is poised to join CICC's parent and top shareholder China Investment Corp (CIC) to take charge of some overseas investments that are not overseen by CSRC, they added.

CIC, which is owned by the State Council, or cabinet, invests overseas through two subsidiaries, CIC International Co and direct investment vehicle CIC Capital Corp. It also has a domestic investment unit, China Central Huijin.

Wu Bo's departure from CICC comes as companies scramble to scuttle plans for initial public offerings in China this year after the watchdog tightened listing rules in a bearish market, darkening prospects for investment banks.

In September last year, Wu Bo became the bank's CFO and two months later, president and its de facto No. 2 executive.

His brother, Wu Qing, was a senior leader in the financial hub of Shanghai before becoming chairman of the regulator in February, when China's stock markets were near their weakest in five years.

(Reporting by Beijing, Hong Kong and Shanghai newsrooms; Editing by Sumeet Chatterjee and Clarence Fernandez)