Banking official, money go missing
By Su Bei (China Daily)
Updated: 2005-01-24 23:52

The Bank of China, the country's largest foreign exchange bank, confirmed yesterday that one of its sub-branches in Northeast China's Heilongjiang Province was involved in financial fraud.

Gao Shan, director of a division in Harbin, reportedly vanished following the disappearance of 290 million yuan (US$34.9 million).

The money was deposited by the Shanghai-listed Northeast Expressway Co Ltd.

Deposits by other companies, amounting to as much as 700 million yuan (US$84.3 million), also vanished.

A Bank of China official said yesterday government departments are investigating the case.

"It involves financial fraud," the official said, without providing further information.

The official also refused to confirm other news, including the sum of money involved.

Economists said the scandal was bad news for Bank of China, which plans to go public this year, and would have a negative impact on the bank's reputation.

Bank of China was selected by the central government as a pilot project to become a joint stock bank.

After being recapitalized by a State injection of US$22.5 billion, the bank reorganized itself into a joint stock company called Bank of China Limited in August last year.

By the end of last October, the bank's bad assets ratio stood at 4.55 per cent, a drop of 11.73 percentage points from the beginning of the year.

The bank's capital adequacy ratio, a measure of how much capital it has relative to assets, stood at 8.56 per cent at the end of October.

The bank also has a plan to usher in foreign company investors as its equity owners, in an aim to increase its capital strength, optimize the capital structure and diversify the ownership.

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