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China punishes 799 in state banks for irregularites costing US$73b

China punishes 799 in state banks for irregularites costing US$73b
China punished 799 employees from the country's "Big Four" commercial banks for irregularities which cost up to 588.5 billion yuan (about US$73 billion) in 2005, state media said yesterday.

Xinhua news agency cited the China Banking Regulatory Commission saying Monday the staff were involved in illegal or unauthorized business and the justice had been meted as part of an ongoing drive to overhaul banks.

China is struggling to prepare its four biggest banks - the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China - for foreign competition in the Chinese market next year.

Under a commitment it made in joining the World Trade Organization, China has agreed to open its banking sector to competition from foreign rivals by the end of 2006.

Foreign strategic investors have been invited to invest in those banks and authorities plan to list all four banks on the stock markets.

The Construction Bank went public in Hong Kong this year, while the Bank of China is widely forecast to sell shares to private investors next year.

On Monday, the CBRC acknowledged that while state banks are making progress in building up corporate governance, "illegal cases, including big cases, are still frequently seen," Xinhua said.

Calling 2006 a "key year" for reform, it urged the Big Four, which account for more than half of the country's deposits and lending, to "tide over the difficulties" and promote the banking industry's healthy, stable expansion.

Further details were not given, but embezzling funds or diverting them for illegal use are common.

The banking watchdog said those punished worked within 103 different levels of the banks.

The past year has seen an increase in the number of arrests and trials on corruption charges of bank officials, from branch managers to higher ranking officials.

Officials attributed the large number of bank scandals to bank reforms and improved government efforts to crack down on financial crimes.