Agricultural Bank taking steps in wake of audit
(Reuters)
Updated: 2006-06-28 20:40
Agricultural Bank of China, one of the country's Big Four state lenders,
vowed on Wednesday to shore up credit risk controls and address abuses following
a revealing audit of its 2004 books.
The bank would deal with loans extended without respecting the rules by
calling them in or tightening related procedures, it said in a statement emailed
to reporters.
The bank would also clamp down on employees who touched client deposits
without permission and step up controls on its bills business. It had already
fired 64 people, including three branch heads for misconduct.
The inspection, carried out by China's National Audit Office last year, had
put the spotlight on the lender's weaknesses and would help it push ahead with
planned reforms, it said. The audit was "beneficial to accelerating reforms and
building a modern commercial bank with sound standards of governance".
The official Xinhua news agency on Monday cited the audit office as saying
that the bank had been involved in 51 criminal cases to the tune of 8.7 billion
yuan ($1.1 billion) in 2004.
Irregularities involving deposits amounted to some 14.3 billion yuan while
those related to loans and bills reached 27.6 billion yuan and 9.7 billion yuan
respectively, Xinhua said. The bank would strengthen implementation of the rules
and further improve its regulations. Since early 2006, it had established new
rules involving risk management and credit.
Industry sources say the Beijing-based bank has hired PricewaterhouseCoopers
as its external auditor. Agbank confirmed an international firm was auditing its
branches to shore up risk controls.
China has injected a total $60 billion into its three other state commercial
banks.
Reports emerged earlier this year that central bank chief Zhou Xiaochuan, who
leads the country's highest-level working group on state bank reform, favoured a
plan to breakup the lender and to put its vast network of branches under the
control of local entities.
Agbank president Yang Mingsheng later denied the reports, saying there was no
proposal to dismantle the bank.
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