Irregularities involving 8.68 billion yuan (US$1.09 billion) were uncovered in the Agricultural Bank of China's (ABC) 2004 accounts, the National Audit Office said yesterday.

The 51 cases involved 157 bank officials, some of whom conspired with outsiders to embezzle the bank's funds, the audit office said in a report released on its website.

It cited as an example two ABC branches in Suining, a city in Southwest China's Sichuan Province. The branch chiefs colluded with securities brokers to defraud the bank of 118 million yuan (US$14.75 million) in loans, and lost more than 75 million yuan (US$9.38 million) in stock market speculation.

Irregularities were also found in the handling of deposits, bank bills and loans.

But He Ziyun, a banking professor with the University of International Business and Economics, said the disclosure is unlikely to have a major impact on the listing of ABC, which is also undergoing restructuring to become a joint stock bank.

The audit office scrutinized ABC's accounts last year; and has scheduled a similar exercise for one big State bank every year.

It has also audited the Industrial and Commercial Bank of China, China Construction Bank, and the four State-owned asset management companies over the past few years. On its audit plan are newly-listed Bank of China and some other listed banks.

ABC officials declined to comment on the issue yesterday but the audit office's report said the bank has taken corrective measures.

So far, 22 of the irregularities have been settled and 95 staff members penalized. The bank has also improved its credit management and internal audit systems, and sent out more inspectors from headquarters to supervise work at branches.

ABC has assets worth 5 trillion yuan (US$625 billion) and its non-performing loan ratio was 26.17 per cent at the end of 2005, down 0.56 percentage point from a year earlier. Its net profit was 1.04 billion yuan (US$130 million) last year, down 48 per cent from 2004.

(China Daily 06/27/2006 page2)