Ask AI · Zhai Xulin’s Retirement and Transition to Risk Control: What Is the Deeper Meaning?

Author | Liu Yinping

Editor | Fu Ying

Source | Dujiang Finance

According to the April 2 announcement from Hongta Securities (601236.SH), Zhai Xu’s qualification as Compliance Director has been approved by regulators, and she has officially taken office. Notably, Zhai Xu is a female finance professional, turning 55 this year, reaching retirement age. A month ago, her position was recently adjusted—she was promoted from Financial Director and Secretary of the Board to Chief Risk Officer, and in this round of adjustments, she also concurrently served as Compliance Director.

This personnel change is not an isolated case. A total of 7 senior executives experienced role adjustments in the same group, with more than half of the core management team “changing posts,” constituting a major reshuffle. Before the adjustment, Hongta Securities’ senior management team was relatively aging—6 out of 7 executives were over 50 years old. Although this round of changes introduced younger talent, some senior executives are still approaching retirement age, indicating that the team’s renewal may not be fully complete.

The personnel reshuffle coincides with the company’s 2025 performance release. Driven by proprietary trading, brokerage, investment banking, and other businesses, Hongta Securities revenue and net profit attributable to the parent increased by 37.76% and 58.84%, respectively, year-on-year. However, the company still relies heavily on proprietary investment business, which accounts for over 70% of income, with significant fluctuations over the past few years, almost directly determining overall performance.

1

A 24-year veteran bids farewell to “accounting” and takes charge of “risk control”

Management reshuffle welcomes younger “blood”

Zhai Xu was born in November 1971, and will turn 55 in November this year. At this near-retirement age, she holds the dual roles of Chief Risk Officer and Compliance Director. This not only reflects the company’s high trust in her professional ability and experience but also raises market questions about whether this is a transitional arrangement for management positions.

From 1993 to 2021, Zhai Xu worked at China Industrial Bank Yunnan Trust Investment Co., Ltd. and Yunnan Jinlv Trust Investment Co., Ltd., engaged in financial management; she joined Hongta Securities in January 2002, beginning a 24-year career there. Her work mainly involved finance and compliance, and she also served as Staff Representative Supervisor and General Manager of the Funds and Finance Headquarters.

In August 2023, she was promoted to Financial Director of Hongta Securities, and in October of the same year, she also became Secretary of the Board. On February 27 this year, Hongta Securities announced that Zhai Xu would step down as Financial Director and Secretary of the Board, and assume the roles of Chief Risk Officer and Compliance Director. Zhai Xu has previously served as General Manager of Compliance and Legal Department and Director of the Party and Mass Work Department (Discipline Inspection and Supervision Department). With extensive experience in finance and compliance, her background suggests she is capable of handling her new roles.

However, Zhai Xu’s role change is not an isolated case. In the same announcement, Hongta Securities’ seven senior executives experienced role adjustments, with more than half of the core management team undergoing changes, marking a “big blood transfusion.”

After Zhai Xu’s position adjustment, Rao Xiong will step down as Chief Risk Officer and Compliance Director, no longer serving at Hongta Securities, but will instead become a director of the holding subsidiary Hongta Red Soil Fund.

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Source: Canned图库

Huang Cangwu stepped down as Vice President and Chief Information Officer, and was appointed Chief Auditor, a newly established position aimed at further strengthening internal control systems. Like Zhai Xu, Huang Cangwu was born in 1971 and has been with Hongta Securities for 24 years. Promoted to Vice President in August 2023 and concurrently serving as Chief Information Officer in October, he is a versatile senior executive who grew from the technical line. His transition from Chief Information Officer to Chief Auditor involves a significant professional shift; both roles are within internal supervision and risk control. Whether his technical background can be leveraged in areas like audit informatization and data auditing remains to be seen.

Vice President Zhou Jiefei took over the role of Financial Director. Born in 1974, Zhou Jiefei is a seasoned securities professional. Prior to Hongta Securities, she worked at Southwest Securities (600369.SH) for 13 years. She joined Hongta Securities in August 2012 as General Manager of the Brokerage Business Department and was promoted to Vice President in May 2016. She is a business expert, but her management experience in finance is limited.

Yan Ran was appointed Vice President. Unlike the other senior executives, Yan Ran is a “parachute” appointee, previously serving as Investment Director at Jian Yuan Trust (600816.SH).

Bi Wenbo stepped down as Securities Affairs Representative and took over as Secretary of the Board, entering the senior management team. Born in 1987, Bi Wenbo is among the younger senior executives at Hongta Securities. Before joining in 2017, he worked at Bank of China (601988.SH) and China Guangfa Bank for eight years.

Ye Biaosong was appointed Chief Information Officer. Like Yan Ran, he is also a “parachute” appointee, previously serving as Operations Director at Zhongshan Securities, with extensive experience in information technology.

In addition to these six senior executives, Hongta Securities also promoted Meng Ze to Securities Affairs Representative, previously serving as Assistant to the Director of the Board Office.

Securities Affairs Representative is not part of the senior management team. Excluding this position, Hongta Securities experienced role adjustments for six out of ten senior executives, accounting for 60% of the team, a significant change.

Hongta Securities previously explained to “Securities China” that this adjustment was a balanced consideration of the upcoming retirement of some senior managers, business development needs, and individual expertise, aiming to optimize internal resource integration, improve management efficiency, and ensure orderly transition of management roles.

Previously, the senior management team of Hongta Securities was generally older. According to the 2024 annual report, including the departing Vice President Gong Xianglin, 7 out of 8 senior executives were over 50. This is not unusual among listed brokerages; many large state-owned financial institutions also have senior management with advanced ages.

After this round of reshuffle, the newly introduced senior executives Yan Ran (47), Ye Biaosong (39), and the newly appointed Secretary of the Board Bi Wenbo (39) inject younger energy into the team. However, including Zhai Xu, Chairman Jing Feng (58) and Vice President Yang Haiyan (54) are close to retirement age, so the management transition may still be ongoing.

2

Asset Management Default and Senior Executive Corruption: Hidden Risks

With the new Chief Risk Officer and Compliance Director taking office, Hongta Securities’ risk management system has undergone critical adjustments.

From recent regulatory penalty records, Hongta Securities has received relatively few fines, indicating overall compliance in business operations and risk management, with risk control levels within acceptable ranges. However, past defaults in asset management products and the successive “falling” of two chairmen reveal deep-seated risks in compliance enforcement, corporate governance effectiveness, and senior executive moral hazard prevention.

In September 2025, a shocking news broke: Hongta Securities and its legal representative and President Shen Chunhui were issued a consumption restriction order by Beijing Financial Court. The cause was a dispute involving a bond repo transaction worth several million yuan related to the company’s “Hongxin 2” asset management plan, originating from a default on the “Huachen Bond” in 2020.

Although Hongta Securities clarified that the arbitration ruling’s payment obligation was on the asset management plan rather than the company itself, and the “restriction order” was later revoked, the incident still raised questions about the company’s asset management risk controls. As the manager, whether there are loopholes in internal fund transfer processes has become a focus of controversy.

Chinese financial think tank researcher Yu Fenghui believes that such incidents could indirectly affect the company—for example, by reducing management fee income, as they involve investor trust in the company’s management capabilities. In the financial services industry, once reputation is damaged, the risk of potential client loss increases, which can impact long-term business growth and market share. Although the company emphasized that operations would not be affected, the actual situation may be more complex.

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Source: Canned图库

Additionally, in 2025, the cases of the two former chairmen of Hongta Securities being sentenced or prosecuted for bribery and related crimes drew market attention.

In January 2025, former Chairman Li Jianbo (served from 2016 to 2021) was sentenced to five years and six months in prison for accepting bribes, with a fine of 600k yuan. The facts showed that between 2011 and 2019, Li Jianbo, leveraging his positions as Vice President of Hongta Group, General Manager/Chairman of Hehe Group, and Chairman of Hongta Securities, illegally received a total of 2.6771 million yuan in bribes.

In April 2025, former Chairman Li Guanglin (served from 2006 to 2016) was prosecuted for suspected bribery and illegal loan issuance, and the case is ongoing.

From March 2006 to December 2023, Li Guanglin used his positions as Vice President of Hongta Group, Deputy General Manager of Yunnan Tobacco, and Chairman of Hongta Securities to seek benefits for others in loan issuance, project development, and personnel adjustments, illegally accepting bribes of a particularly large amount; he also violated national regulations by issuing loans, with a particularly large amount involved.

Both chairmen exploited their positions to seek benefits for others and accepted bribes, constituting senior executive corruption cases, exposing significant loopholes in the supervision and checks on senior management power at Hongta Securities. This situation directly points to the core responsibility of the new Compliance Director and Chief Risk Officer Zhai Xu—building a “firewall” for power supervision.

3

Net profit increased nearly 60%

Proprietary trading income accounts for over 70%

Alongside the management reshuffle, Hongta Securities delivered an impressive performance: In 2025, operating income reached 600k yuan, up 37.76% year-on-year, and net profit attributable to the parent was 2.43B yuan, up 58.84%.

Driven by market conditions, proprietary trading, brokerage, and investment banking all grew, with brokerage fee net income up 24.83% to 262 million yuan, and investment banking fee net income up 231.71% to 138 million yuan.

Cost reduction was also significant, with operating expenses at 861 million yuan, down 63 million yuan or 6.86%, boosting profits mainly due to the recovery of risk projects from stock pledge repo business and the full recovery of previously provisioned receivables, reducing credit impairment losses by 73 million yuan.

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However, some projects underperformed. Asset management business shrank for five consecutive years, with net fee income only 9.33 million yuan, down 61.38%, and due to declines in other debt investments and coupon rates, interest income fell 7.97% to 380 million yuan.

Looking at Hongta Securities’ business segments, proprietary investment is undoubtedly the most important, serving as the “ballast” of the company’s performance, including stock investments, fixed income investments, innovation and derivatives, New Third Board market-making, equity direct investments, and alternative investments. In 2025, proprietary investment income was 1.21B yuan, up 28.04%, accounting for 71.83% of total operating income, slightly down 5.46 percentage points from 2024 but still high.

Proprietary business profit was 1.65 billion yuan, up 28.6%, accounting for 105.11% of total profit (some projects incurred losses).

Source: Hongta Securities 2025 Annual Report

Among 26 A-share listed brokerages that have disclosed 2025 financials, Hongta Securities’ proprietary business income (calculated as investment income + fair value change gains – investment income of associates and joint ventures) accounts for the highest proportion of operating income at 66.69%, while the net brokerage fee income accounts for only 10.78%, ranking second to last.

Over the past few years, Hongta Securities’ proprietary income and its proportion have fluctuated greatly, even directly determining the overall performance. For example, in 2022, losses from proprietary investments caused overall revenue and profit to fall to their lowest levels in recent years.

Yu Fenghui pointed out that Hongta Securities’ over-reliance on proprietary investments poses significant risks, as market volatility can lead to unstable earnings or losses. Additionally, the small share of wealth management and institutional services indicates a less diversified business structure, lacking resilience against market fluctuations.

With the management team reshuffle and younger talent joining, can the new Chief Risk Officer and Compliance Director Zhai Xu embed risk and compliance management into business expansion? Will the company break its over-dependence on proprietary investments and pursue a multi-pronged approach? Only time will tell.