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Major banks: loan misuse won't affect business

(Xinhua)
Updated: 2009-06-23 21:11

BEIJING: Three major Chinese lenders said Tuesday that auditors had discovered irregularities in their lending last year, but added that these findings would not affect their financial results.

The Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB) and China CITIC Bank said in separate statements that the National Audit Office (NAO) found some violations of rules in last year's routine audits.

None of the lenders revealed the amount of loans involved in these violations.

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However, Chief Auditor Liu Jiayi said in February that the NAO uncovered misuse of 6 billion yuan (US$882.4 million) in last year's audits of financial institutions.

About half of the amount was discovered in China's three state-owned banks -- ICBC, CCB and the Bank of China -- according to Liu.

ICBC, China's largest lender, said in Tuesday's statement that some of its branches were found to have violated rules in business operations, and some weaknesses in management were also pinpointed.

The bank added it had corrected the violations and had moved to improve risk management and internal controls.

The other two lenders said some of their branches had been found to have extended loans against rules or been negligent in supervision over borrowers after the loans were made.

CCB said most of the loans found with irregularities had been called in and the rest would be collected shortly.

China CITIC Bank said all the irregular loans, or those that had been inappropriately used, had been regained.

Tuesday's statements came amid increasing concerns over credit risks as Chinese banks made record new loans this year to stimulate the economy.

New yuan-denominated loans in the first five months had reached 5.84 trillion yuan, far exceeding the full-year target of 5 trillion yuan

In a notice dated May 31, banking regulators asked lenders to pay "particular" attention to the financial conditions of debtors and conduct better risk analysis before making loans to ensure loan quality.