Bank of China said yesterday it would improve internal controls after former heads at one of its local branches were charged with a scheme to defraud US$485 million.

A US grand jury charged Xu Chaofan and Xu Guojun, former bosses at the Kaiping branch in South China's Guangdong Province, and their wives on January 31 with 15 counts of money laundering, racketeering and fraud.

Wang Zhaowen, spokesman for Bank of China, said: "We will learn lessons, and further beef up internal risk control systems in accordance with good corporate governance to ensure the safety of banking assets and promote the healthy development of the bank.

"We will co-operate with international law enforcement departments to punish the criminals, recover any missing cash as much as possible, and maintain the safety of the country's economy and finance."

Economists said Wang's response to the issue suggested the bank, the country's largest foreign exchange lender, was trying to improve its image.

It is planning to be the second of China's four largest State-owned banks to list overseas, following China Construction Bank, which listed in Hong Kong last October.

Bank of China named Bank of China International, Goldman Sachs Group and UBS as financial advisers and lead underwriters last August for the planned initial public offering.

It also signed strategic investment agreements with the Singapore-headquartered Temasek Holdings (Private) Limited, the Royal Bank of Scotland Group, the Swiss-based bank UBS and the Asian Development Bank.

The agreements enabled the four investors to buy a combined 21.85 per cent of the bank's stake with US$6.78 billion.

The bank, which received a US$22.5 billion capital injection from the government in late 2003, reorganized itself into a joint-stock company named Bank of China Limited in August 2004.

By the end of last June, the bank's non-performing credit rate declined to 4.38 per cent, from the 5.12 per cent at the beginning of the year.

Its capital adequacy ratio was 10.04 per cent at the beginning of last year.

Source: China Daily