The China Banking Regulatory Commission (CBRC) has fined Guangfa Bank RMB722m ($109m) for issuing forged guarantee, concealing bad assets and operating with lax internal controls.

Besides imposing the monetary penalty, the Chinese financial watchdog has seized illegal income stashed by the Chinese lender.

During its probe, the CBRC found that Guangfa Bank fabricated guarantee documents on RMB1bn ($151.1m) worth of bonds that went into default.

The bonds were issued by two units of the phone manufacturer Cosun Group, and sold on Ant Financial’s online wealth management platform, which is affiliated with e-commerce giant Alibaba Group.

When the bond defaulted in December 2016, Ant Financial and 10 other banks demanded compensation for investors from Zheshang Property and Casualty Insurance, which had provided insurance coverage on the debt.

They then discovered that the insurer had been issued fabricated letters of guarantee by employees at Guangfa Bank’s branch in Huizhou.