QILU Bank, a small Chinese bank that was 20 percent owned by the Commonwealth Bank of Australia, was being investigated for its part in a commercial paper fraud of up to 1.5 billion yuan (US$226.59 million), domestic media reported late Tuesday.
Police in Jinan, capital of the eastern province of Shandong where Qilu is based, were investigating the bank for accepting forged commercial paper, Caing Web portal and China Business News, both leading financial news outlets, reported.
Caing said police had interrogated at least one bank executive. It said other banks could be involved.
Phone calls to Qilu s headquarters were unanswered. But two Qilu branches in Jinan said the bank s deposit and lending businesses were running as per normal.
A Commonwealth Bank spokesman declined to comment pending investigation by the Chinese Public Security Bureau.
Qilu s problems come after China s commercial paper market took off in the past two years as robust growth in the world s second-largest economy fuelled demand for credit.
Qilu, formally known as the Jinan City Commercial Bank, was formed by merging local urban credit cooperatives in 1996.
It had 35.3 billion yuan of outstanding loans and 54.7 billion yuan in deposits at the end of 2009.
The bank employed 1,800 people across 72 outlets at the end of 2009, when it made a net profit of 488 million yuan, up 39 percent from 2008, its Web site said.
(SD-Agencies)
