China’s bank regulators are busy drawing up new regulations on the heels of $119 billion in unspecified banking "irregularities”, an amount that would make even the most troubled U.S. bank blush and far outstrips the $7.1 billion blown by a French trader this week.
"We must strengthen our regulatory capacity and nip these risks in the bud,” Chinese bank regulator Liu Minkang noted on the agency’s Web site.
The total amount of irregularities found equals almost three times the profits of the country’s top five state-owned banks. However, regulators say they found fewer problems this time than they did a year ago.
Regulators’ findings triggered removals from office of 117 bank managers and fines levied against 12,687 people following investigations.
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The Shanghai Daily reported that regulators found a total of 445 cases of irregularities at the 79,200 banks, bank branches and sub-branches they examined—down 58.4 percent from the total reported a year ago.
China must set up a standardized system to punish and fine perpetrators, making the costs of committing wrongdoings higher than the potential gains, Minkang wrote.
According to news.xinhuanet.com, the amount of money involved in the irregularities at Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and the country's other three State-owned banks is down by 69 percent over last year.
Also on a more positive note, combined profits for Chinese banks rose to 298.7 billion yuan at the end of 2007, up from 36.4 billion yuan in 2002.
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Bloomberg reported that ICBC, the world's biggest bank by market value, Bank of China, China Construction Bank Corp. and Bank of Communications Co. had average returns of 1.1 percent on their assets last year, while their mean non-performing loan ratio stood at 2.87 percent.
At the end of 2007, five Chinese banks had control or hold stakes in overseas financial players and seven had 60 overseas outlets with overseas assets of more than $167.4 billion.
Domestic banks, including their investments and branches abroad, had a total of $267.4 billion in overseas assets at the end of last year.
Twenty-one overseas banks — including HSBC, Citibank, BEA, Standard Chartered Bank, OCBC, Deutsche Bank and Hang Seng Bank — have been incorporated in China and are seeking unlimited retail yuan services.
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