China Construction Bank (CCB), which plans to list shares in Hong Kong before the end of this year, said yesterday it had uncovered 31 cases of employee misconduct at its branches since the beginning of the year.

The discovery of these cases at their early stages has helped the bank prevent further losses of 36.39 million yuan (US$4.38 million), it said in its website.

Former Chairman Zhang Enzhao is currently under investigation.

CCB announced in May that it would force the managers of departments involved in corruption scandals to resign.

Officials must resign when their departments are involved in scandals that involve huge losses, have a negative social impact or damage employee morale, it added.

Two bank managers at the Shanxi and Hunan branches have already been forced to resign for dereliction of duty.

China has been taking a raft of measures including restructuring and trying to list shares of its major State-owned lenders to strengthen the banking system before foreign competitors can enter the market without restrictions before the end of next year.

Last Friday, the bank agreed to sell a 9 percent stake worth US$3 billion to the Bank of America.

It also offered the Bank of America an option to buy additional shares in the future to increase its ownership in CCB to 19.9 percent.

CCB received a US$22.5 billion capital injection from the State in late 2003, in trial reforms by the government to turn it into a share-holding firm.

Last September, the bank was split into two parts - China Construction Bank Corporation and China Construction Bank Investment Co Ltd.

China Construction Bank Corporation continues to operate the banking business.

Last year, the bank's pre-tax profit rose 34.01 percent from the year before to 50.2 billion yuan (US$6 billion).

By the end of last year, the bank's non-performing loans had dropped to 3.92 percent, while its capital adequacy ratio increased to 11.29 percent.

The China Banking Regulatory Commission, in a bid to reform the banking industry, has urged domestic banks to hone their risk-management systems and root out irregularities following a series of scandals.

(China Daily June 21, 2005)