1970-01-01 08:33:27
China's banking regulator has punished eight bank branches involved in two cases of State-owned enterprises illicitly using loans for stock market and property market investment.
The China Banking Regulatory Commission (CBRC) uncovered the cases, amounting to about 5 billion yuan in irregularities, during an investigation that started at the beginning of 2007, it said in a statement yesterday.
The eight branches involved belong to Bank of Communications, Bank of Beijing, China Merchants Bank, the Industrial and Commercial Bank of China, Bank of China, Industrial Bank, China CITIC Bank and Shenzhen Development Bank.
The CBRC found that China Nuclear Engineering & Construction (Group) Corp has borrowed accumulated loans of 2.37 billion yuan from Bank of Communications and Bank of Beijing since 2001. The company claimed it would use the funds for building nuclear power plants.
However, 87.32 percent of the total bank loans were diverted into other areas, 612 million yuan of which went into its related property development companies and 132 million yuan into the stock market and other investments.
Six bank branches failed to scrutinize loans to China Shipping (Group) Co. At least 2.4 billion yuan out of 2.7 billion yuan of loans granted since last June were directly or indirectly transferred into its securities account for stock purchases in initial public offerings.
Punishments include fines, partial suspensions of credit businesses and the demotion of branch officials, the CBRC said.
"Although such irregularities are individual cases, the banking industry should learn lessons from them and strengthen loan management," a CBRC official said.
For the banking regulator, the primary responsibility is to protect the interests and rights of depositors, he said, adding that the punishments are to urge banks improve risk management.
Wang Zhaowen, a Bank of China spokesperson, said yesterday that the bank has ordered all branches carry out self-inspections, preventing bank loans into the stock market.
The State-owned Assets Supervision and Administration Commission of the State Council will also punish the two enterprises, the CBRC statement said.
Source:China Daily