January 22, 2016 / 1:26 PM / 4 years ago

UPDATE 1-China's AgBank may lose $593 mln due to notes resale incident

(Adds company statement in paras 1-3)

SHANGHAI, Jan 22 (Reuters) - The Agricultural Bank of China Ltd (AgBank) found 3.9 billion yuan ($592.87 million) exposed to risk after an incident in the notes resale business, it said on Friday.

Agbank, China’s third largest lender, is working with authorities to investigate the incident which took place at its Beijing branch, it said in a brief statement on the Hong Kong stock exchange. It did not provide further details.

Earlier on Friday, Chinese financial publication Caixin reported that AgBank may lose 3.8 billion yuan from a bills of exchange scam allegedly carried out by two employees.

The report, quoting unnamed sources, said the employees had illegally sold the bills of exchange to an unnamed third-party, and then used the proceeds to invest in the stock market, which has slumped since the middle of last year.

The report said the employees, who worked at a Beijing branch, were now under investigation, but did not specify by whom. It said the Ministry of Public Security and the China Banking Regulatory Commission had also reported the case to the cabinet.

China’s banks have been dogged by accusations of corruption, with a recent crackdown on the financial industry netting senior executives for bribery, including the former vice president of AgBank who was sentenced to life imprisonment last year for accepting bribes. ($1 = 6.5782 Chinese yuan renminbi) (Reporting by Engen Tham and Shu Zhang; Additional reporting by Meg Shen in Hong Kong; Editing by Miral Fahmy and Katharine Houreld)

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