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Tue, Jul 08, 2003 - Page 12 News List

Shanghai chief of Bank of China loses job after loan probe

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Bank of China, the country's second-biggest lender, named Huang Zhiwei to replace Zhou Lu as general manager of its Shang-hai branch after an internal review found Zhou should be held responsible for irregular loans to a local property firm.

"During an audit review of the Shanghai branch, the head office discovered that certain credit extensions made to the Wan Tai Group, granted during Zhou's tenure, involved irregularities, and Zhou should be held directly responsible," the Beijing-based bank said in a statement.

Zheng Ruoping, a spokeswoman for Bank of China's Shanghai branch, said Zhou declined to comment.

China's government is cracking down on property-related lending, which totaled US$22 billion at the end of April, after it was found some loans were illegally obtained and could worsen banks' asset quality.

About a quarter of the country's loans have gone bad.

Wan Tai, a Shanghai-based real-estate developer under investigation by Chinese authorities, doubled its assets between 1995 and 2001 by borrowing money and setting up affiliates engaged in trading, metals, advertising and education although it has reported no income for six straight years, the China Securities Journal reported earlier, citing government documents.

Qian Yongwei, the owner of Wan Tai, is being questioned about more than 1.3 billion yuan (US$157 million) of loans Wan Tai drew from Bank of China's Shanghai branch, the Hong Kong media reported last month.

The government is probing another Shanghai property tycoon, Zhou Zhengyi (周正毅), whose New Nongkai Global Investment Ltd has borrowed HK$1.77 billion (US$227 million) from Bank of China's Hong Kong unit and still owes the lender HK$741 million.

Liu Jinbao (劉金寶), who was replaced as chief executive at BOC Hong Kong (Holdings) Ltd on May 28, has been investigated over loans made during his tenure as general manager of Bank of China's Shanghai branch during 1994 to 1997.

Liu, 50, has been cleared of any major wrongdoing in his dealings with Zhou and the disappearance of millions of US dollars at Bank of China's Shanghai branch after preliminary investigations, the South China Morning Post reported yesterday, without identifying sources.

Bank of China declined to comment.

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