The Bank of China will be fined as much as US$20 million by US regulators over irregular fund transfers that have been linked to the former head of the nation's second-biggest bank, a central bank official said.
The fine relates to a Chinese probe of Wang Xuebing, sacked last week as head of China Construction Bank over loans made when he ran Bank of China between 1993 and 2000, the People's Bank of China official said, asking not to be identified.
The fine comes after a probe by the U.S. Office of the Comptroller of the Currency, the Asian Wall Street Journal reported earlier.
Bank of China "is cooperating fully with the regulatory authority in strengthening our management," the lender said in a statement, without identifying the authorities involved. "This includes measures to counter money-laundering activities, and ensure client confidentiality."
The penalties, among the heaviest levied since Daiwa Bank Ltd. was ordered to pay US regulators US$340 million in 1996, were levied before an industry meeting next month, being chaired by Premier Zhu Rongji (朱鎔基), at which the bank is expected to seek approval for plans to sell between US$4 billion and US$6 billion of shares in its Hong Kong unit.
Prospects for the sale may have been hurt, following Wang's dismissal, and after the nation's top auditor said he's investigating 35 bank staff over lending "irregularities."
"Of course it will affect the progress of [their listing plans]," said Stephen Ho, vice president of Hansberger Global Investors.
"But they have no choice, they have to clean it up as investors' concern is whether the bank's balance sheet is legitimate and creditable."
Wang's dismissal was the result of a probe into 22 questionable loans worth 2.7 billion yuan (US$326 million), Xinhua news agency reported.
The Office of the Comptroller of the Currency "doesn't discuss banks that we supervise," spokesman Robert Garsson said.
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