Bloomberg News

China Discovers $119 Billion Banking `Irregularities'

January 18, 2008

China discovered 860 billion yuan ($119 billion) in banking ``irregularities'' last year, almost triple the profits by Industrial & Commercial Bank of China Ltd. and other ``major'' Chinese commercial banks, the regulator said.

``We must strengthen our regulatory capacity and nip these risks in the bud,'' Liu Mingkang, chairman of the China Banking Regulatory Commission, said at the watchdog's annual planning meeting, according to a statement posted on its Web site today.

China's ``major'' commercial banks posted combined profits of 299 billion yuan in 2007, the statement said, without providing a year-earlier figure. A July 5 report said the banks earned an aggregate pretax profit of 240.9 billion yuan in 2006. Assets at Chinese banks totaled 52.6 trillion yuan at the end of last year, today's release said.

ICBC, the world's biggest bank by market value, Bank of China Ltd., China Construction Bank Corp. (939) and Bank of Communications Co. had average returns of 1.1 percent on their assets last year, while their mean non-performing loan ratio stood at 2.87 percent, according to the statement.

China's banking watchdog uncovered ``irregularities'' in its investigation of 79,200 domestic bank branches, the statement said, without defining the term.

Domestic banks had a total of $267.4 billion in overseas assets as at the end of last year, which included their investments and branches abroad, the Chinese regulator said.

China will draft regulations on project finance and loans for acquisitions, fixed assets, working capital and personal use in 2008, the watchdog said.

To contact the reporter for this story: Josephine Lau in Beijing at jlau22@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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