The Bank of China, the country's largest foreign exchange bank, confirmed on Monday that one of its sub-branches in northeast China's Heilongjiang Province has been involved in financial fraud.

Gao Shan, director of a division in Harbin, has apparently vanished following the disappearance of over 800 million yuan (US$96.3 million).

Of this, 330 million yuan (US$39.7 million) is reported to have been deposited by the Shanghai-listed Northeast Expressway Co and 320 million yuan (US$38.5 million) by Heilongjiang Chenergy Hit Hi-tech Venture Capital Co.

A bank official said that government departments are investigating the case, but refused to confirm any details, including the sums of money involved.

Economists said the scandal was bad news for the Bank of China, which plans to go public this year, and would have a negative impact on the bank's reputation.

The bank was selected by central government for a pilot project to become a joint stock bank.

After being recapitalized by a state injection of US$22.5 billion, the bank reorganized itself into a joint stock company called the Bank of China Limited in August. By the end of October, its bad assets ratio stood at 4.55 percent, a drop of 11.73 percentage points from the beginning of the year.

The bank also has a plan to usher in foreign company investors as equity owners, in an aim to increase its capital strength and diversify its ownership.

(China Daily January 25, 2005)