From Bloomberg News via the International Herald Tribune (link)
China’s banking regulator has warned state-owned lenders, including Bank of China, for the second time in five months after discovering 750 million yuan of fraud related to bank bills. The amount is equivalent to $94 million.
“Some banks and their branches are blindly developing bill business at the cost of risk control,” the China Banking Regulatory Commission said in an April note to lenders, a copy of which was obtained by Bloomberg News. Bank bills – notes issued by a lender promising to pay the bearer on demand – are used to pay for goods and services.
Bank of China, China Construction Bank and Agricultural Bank of China found 11 cases of bank-bill fraud between July last year and March, the commission said. Bank of China, seeking about $8 billion in an initial share sale this month, accounted for three-quarters of the total. Government oversight of lenders is increasing as China prepares to open the banking industry to overseas competition at the end of this year.
