CITIC Bank uncovers US$147.4m fraud
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E-mail Xinhua, January 29, 2016
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A CITIC Bank branch. [Xinhua] |
China CITIC Bank, the country's seventh-largest lender, said on Thursday it could lose 969 million yuan (148 million U.S. dollars) due to risks related to bank notes, following a similar incident at another major Chinese bank.
The incident took place at its Lanzhou branch, CITIC Bank said, adding that police have opened an investigation.
"The amount exposed to the risk is 969 million yuan," it said, without giving any details about the incident.
CITIC Bank said it would work with the public security department and institutions involved "to safeguard the security of funds to the greatest extent."
On Jan. 22, the Agricultural Bank of China (ABC), one of the country's four largest lenders, said that it could lose over 3.9 billion yuan in what it called a "material risk incident" involving notes held under a resale agreement.
Business magazine Caixin reported that two employees at ABC's Beijing branch were at the center of the scandal, having illegally sold bills of exchange worth 3.915 billion yuan to an agent in the southwestern city of Chongqing, who sold them to another bank.
The bills of exchange work in a similar way to post-dated cheques, which demand one party pay a fixed sum to another in a set period of time, Caixin said.
Incidents related to bank notes range from note fraud to illegally redeeming funds. "Such cases are happening with increasing frequency, highlighting banks' flawed internal controls," said Guo Tianyong, a professor at Central University of Finance and Economics.
Eighty-two percent of the bankers polled in a recent survey said that the lax enforcement of the banking regulations is the main reason behind the increase in such cases.
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