China hammers big banks again, warns of severe punishment

China is putting increasing pressure on state-owned banks to reform.

In a new sign of Beijing’s continued displeasure, the China Banking Regulatory Commission warned that big banks will be "severely punished" for charging excessive fees.

Late last week, China's Premier Wen Jiabao assailed China's top banks as a monopoly that made money too easily while strangling business and economic growth.

Wen said the government must "break this monopoly" by easing the entry of more private capital (including foreign capital) into the financial system. His remarks immediately sent stocks of China’s top banks plunging and gave voice to consumer concerns the big banks are too abusive.

The banking regulator said it began an investigation into bank fees on April 1. Banks found to be charging high fees for routine services will be punished, CBRC said.

Customers continue to complain about expensive and arbitrary banking fees that include matters as minor as changing an Internet password.

Public anger has already risen over the caps on the interest rates banks pay depositors that gives banks a source of cheap funds but hurts the value of customers' deposits as inflation rises.

Banks are also criticized for not offering sufficient funding for small and medium-sized businesses as China's economic growth slows.