August 6, 2009 / 10:42 AM / 10 years ago

Massive bank fraud trial starts in China -report

BEIJING, Aug 6 (Reuters) - A court in southern China has begun to try executives at the centre of the country’s biggest alleged bank fraud, local media said.

Property developers and bank officials stand accused of fraudulently borrowing 9.8 billion yuan ($1.44 billion) from Bank of Communications (601328.SS) (3328.HK) in Guangzhou, Caijing magazine reported.

Officials began investigating the case in 2007.

Bank of Communications (BoCom), the country’s fifth-largest bank by assets, has already set aside provisions and dealt appropriately with employees involved in the case, an investor relations official, who did not give his name, told Reuters.

The official added that the case would have no impact on the bank’s asset quality or earnings this year.

BoCom is roughly 19 percent owned by HSBC (HSBA.L) (0005.HK).

About half of the allegedly embezzled money has been recovered, while 4.6 billion yuan remains on BoCom’s books as non-performing loans, Caijing reported.

Police are still trying to track down Liu Changming, a former BoCom regional president who is also a suspect in the alleged fraud, the magazine reported. ($1=6.830 Yuan) (Reporting by Samuel Shen and Simon Rabinovitch; Editing by Lincoln Feast)

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