The chairman of the Industrial and Commercial Bank of China (ICBC), the world's largest bank by assets, said Thursday that it would not compensate investors for losses related to a fund product it marketed to them.
Jiang Jianqing told CNBC that the event can be considered educational, with investors learning the lesson of moral hazard in financial markets.
"ICBC will not rigidly pay out the funds to the investors," he said while attending the World Economic Forum in Davos, Switzerland. "We do not assume that rigid responsibility."
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"I believe this incident has been a very good opportunity to educate the investors, to educate the trust companies and to educate ICBC," Jiang said. In the future, he added, if customers buy "wealth management products or other products they must see clearly the risks."
The statement comes amid weeks of speculation and conflicting reports that ICBC would be forced to help make investors whole.
On Jan. 15, Reuters reported that shares had fallen on talk that the bank would have to help repay about $496 million invested in the high-yield product. The fund, issued by China Credit Trust and marketed by ICBC, is due to mature on Jan. 31, the news agency said.
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The trust product made loans to an unlisted coal company, Shanxi Zhenfu Energy, whose vice chairman was later arrested for accepting deposits without a banking license, according to Reuters.
Recent reports from Bloomberg, citing The Time-Weekly, have suggested that ICBC could foot the bill and give people their money back.
Jiang told CNBC that the bank would now review all partners in entities with which it does business, including conducting background checks.
"Trust companies ... must assume responsibilities of managing their products even better in the future, " he said.
-By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81