Chinese bank fraud trial begins

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BEIJING - Bank executives and property developers alleged to have fraudulently borrowed 9.8 billion yuan ($1.44 billion) from Bank of Communications have reportedly gone on trial in China.

The alleged fraud against Bank of Communications would be the largest banking fraud in the country's history, with around half the money reportedly already recovered, with 4.6 billion yuan remaining on the bank's books as non-performing loans.

Bank of Communications posted a $1.16 billion net profit for the first three months of 2009, representing an almost 40% quarter-on-quarter increase, with an unnamed bank spokesman reportedly claiming the bank has set aside provisions and that the alleged fraud will not have an impact on the bank's earnings for 2009.

Officials began investigating the case in 2007, and police are reportedly still attempting to locate former regional president Liu Changming, who is suspected of involvement in the alleged fraud.

Bank of Communications is China's fifth largest bank by assets and is 19% owned by UK-based HSBC, which has sought to expand its Chinese business in recent years, returning the bank to its Hong Kong and Shanghai 19th century origins.