Irregularities in Agricultural Bank involve 51.6 bln yuan: auditor

An annual check on the Agricultural Bank of China (or ABC), one of the "big four" state banks in the country, had uncovered irregularities involving 51.6 billion yuan (6.45 billion U.S. dollars) in its business in 2004, the National Audit Office announced here Monday.

According to the latest audit report, "irregular operation" was cited as a "prominent problem" for the bank.

Irregularities in deposit business involved 14.27 billion yuan, with another 27.62 billion yuan on granting loans, while the fraudulous bill issuance involved 9.72 billion yuan, the report said.

The deposit frauds included altering deposit categories, embezzling clients' savings, opening undue accounts, the report said, adding that violations in loan granting mainly existed in fields like auto loans and land reservation loans, according to the report.

"Some agricultural bank branches turned a blind eye on bill issuance, causing numerous frauds," the report said.

Auditors also found 157 people suspicious for economic crimes in 57 fraud cases that involved 8.68 billion yuan. Some of these cases were conspiracy set up by bank employees and outsiders, the report said.

Loan granting to colleges and universities is categorized as a "high risk business" in the report, as it said the schools' limited sources of funding can hardly pay back rising school loans.

Auditors launched the check on the ABC in 2005 over its 21 local branches in such places as Beijing, Tianjin and Shanghai.

Among the country's "Big Four" state banks -- the Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), China Construction Bank (CCB) and ABC, ABC is the only one left open to bank reforms, whereas the three other banks have either converted to joint-stock companies or sold shares to public investors.

China's banking regulator, China Banking Regulatory Commission, said earlier this month that the central authorities are making active research into the reform plan of the ABC, which is plagued by heavy historical burdens, leaving many problems unsettled, due to "a myriad of reasons."

Analysts agree that the bank would need up to 70 billion U.S. dollars to clear its non-performing loans before it could meet overseas listing standards.

ABC is widely believed to be the worst hit by massive lending to the rural sector, with a non-performing loan ratio of 24.75 percent reported at the end of March, compared with the one to two percent level reported by established overseas banks.

The central government must restructure its banks by the end of this year prior to the full opening of China's financial markets to foreign rivals under a commitment made to the World Trade Organization in the late 2001.

Source: Xinhua