Shadow of corruption lurks behind investors – Jonathan Watts
From Guardian Unlimited (link):
The Bank of China has been among the worst affected by corruption. This March, five executives were arrested on suspicion of defrauding the institution of $20m. Last year, a former vice president, Liu Jinbao, was given a suspended death sentence for embezzling 14m yuan (¬£927,000). Wang Xuebing, the bank’s president from 1994 to 2000, was sentenced to 12 years in prison for taking millions of yuan in bribes and gifts.
But it is lax credit control that is thought to pose the biggest danger. Bank lending is growing sharply, fuelling excess investment in luxury apartments, automobile firms and cement companies. If the economy slows, non-performing loans could rise again.
It is a risk investors seem more than willing to take. Even though the Bank of China’s flotation will be the biggest since the $10.6bn share sale by the American telecoms group AT&T in 2000, its record will not stand for long. Later this year, the Industrial and Commercial Bank of China expects to raise more than $12bn in its IPO. The world’s willingness to bet on China has never been greater.