Major Chinese lenders made illegal loans, Beijing's audit office says
BEIJING, June 20 (Reuters) - Three of China's largest
lenders have made illegal loans to polluting industries and the
property sector, and have exacerbated local government debt
through loans to local financing vehicles, the National Audit
Office said on Wednesday.
Violations by Industrial and Commercial Bank of China Ltd
, Agricultural Bank of China Ltd (AgBank)
, and China CITIC Group Co., Ltd included
providing loans, discounted bills and gold leases to unqualified
companies, the audit authority said in a statement posted on its
They were also found to invest funds from their wealth
management products into banks' non-public issuance of preferred
shares through the use of trust and other channels, among other
illegal shadow banking activities, it said.
Based on the authority's statement, the banks themselves
apparently were not punished. More than 1,500 people at the
lenders were fined or received administrative punishment that
could include demotions and pay cuts, it said.
The lenders have corrected most of their problems, the audit
The authority said it carried out an audit between July and
September 2017 of the lenders' 2016 assets and liabilities.
The office said it found the three lenders lacked accurate
asset classification in credit risk management, and excessively
lent to certain industries. Some loans or investment projects by
those banks were at credit risk, but the office did not give
Lenders also inflated their size of deposits and reported
"incorrect" loan figures to small and medium-sized companies, it
China is in its third year of a financial crackdown on
shadow banking, looking to close loopholes in its financial
system as debt risks mounted.
In a separate statement on Wednesday, the audit office said
that it had uncovered illegal fund raising by five local and
three regional governments, but it maintained debt risks were
being effectively controlled.
(Reporting by Yawen Chen and Ryan Woo; Editing by Richard
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