Chinese banks’ internal control is in very bad shape

Second warning for bank giants over bills fraud – The Standard

The banking regulator has warned state- owned lenders such as Bank of China for the second time in five months after discovering 750 million yuan (USD 94 million) of fraud related to bank bills.

"Some banks and their branches are blindly developing bill business at the cost of risk control," the China Banking Regulatory Commission said in a note to lenders last month.

Bank bills - notes issued by lenders promising to pay the bearer on demand - are used to pay for goods and services.

Bank of China, China Construction Bank and Agricultural Bank of China found 11 cases of bank-bill fraud between July last year and March, the commission said.

Bank of China, seeking about US$8 billion (HK$62.4 billion) in an initial share sale this month, accounted for three-quarters of the total.