China's National Audit Office (NAO) has launched an overall audit on the Agricultural Bank of China (ABC), one of China's "Big Four" state-owned commercial banks.

The audit will help the bank find internal problems and create the conditions for its future listing, according to report from the China Business newspaper. The audit is expected to be complete by Nov. 20, 2005.

The debt-laden ABC, a large part of whose loans has gone to China's farming sector, is the last of the "Big Four" to receive NAO's thorough audit. The NAO has gained respect for its outright announcement of accounting irregularities of giant state-owned enterprises, banks as well as governmental departments.

The previous NAO investigation of state-owned banks has found that Feng Mingchang, a private entrepreneur in southern Guangdong Province, defrauded the Industrial and Commercial Bank of China (ICBC) of loans of billions of yuan. The NAO also disclosed the embezzlement and bribery case concerning Liu Jinbao, former vice board-chairman of the Bank of China, which shocked the public at the time.

The audit work on ABC will be focused on risk control, management and profit, aiming to regularize management, reduce loopholes and prevent risks, the newspaper quoted the insider as saying.

The county-level ABC branches will become a new focus of audit work, said the insider.

Alarming bank crimes have been frequently publicized in recent years, as China strives to reform its banking system, whose rate of non-performing loans stood at 15.6 percent on average by the end of 2004.

"NAO's direct investigation resulted in the revealing of recent corruption cases in China's banking field," said Professor Zhao Xijun with the Renmin University of China.

Zhao said he believed that some white collar crime in ABC will surface after the audit.

In March 2005, the China Banking Regulatory Commission announced a scandalous ABC fraud in northern Inner Mongolia Autonomous Region, involving 115 million yuan (about US$14 million).

Together with other "Big Four," the ABC is preparing for public listing by clearing bad loans and streamlining operation. It has just finished a large-scale, two-month self-examination, according to the newspaper.

After the examination, the ABC halted 19 crimes involving 14 million yuan in the first four months this year, according to sources with China Banking Regulatory Commission.

The ABC has submitted its plan on joint-stock reform to the State Council. The government will inject capital into the ABC, at an amount possibly exceeding that of the ICBC, or even the Bank of China (BOC) and China Construction Bank (CCB), according to the newspaper.

The treasury injected US$45 billion in the BOC and CCB at the end of 2003, each of which got US$22.5 billion. This year a total of US$15 billion of the country's foreign exchange was allocated to the ICBC for its reform.

The country, however, will not start the joint-stock reform on the ABC until it develops an overall reform plan on rural finance system, some experts said.

(Xinhua News Agency May 23, 2005)