Bank of Tianjin Reports $121 Million Bill-Related Risk Case

  • Lender says case occurred at its Shanghai operations
  • Citic Bank, Agricultural Bank revealed bill incidents earlier

Bank of Tianjin Co., which listed itself in Hong Kong last month, reported a 786 million yuan ($121 million) “risk incident” related to its bill-financing business.

The incident occurred at the lender’s Shanghai operations, it said in a filing to the Hong Kong stock exchange on Friday, without revealing details. The bank said it has been “proactively” working with police, who have started an investigation, to secure the funds.

The lender reported the case to police after the funds failed to arrive in one of its accounts on April 6, said a person with knowledge of the matter, who asked not to be named discussing private information. Calls to Bank of Tianjin’s board secretary went unanswered.

Recent bills-related cases have exposed poor internal controls at some Chinese banks and the risks involved in the bill-financing business, which has doubled in value to 4.6 trillion yuan in the past two years. The bills, or notes, are used for short-term corporate lending, but have often been used to fund speculative investment, and sometimes used by banks to inflate their own balance sheets to meet regulatory requirements.

China Citic Bank Corp. in January uncovered a risk incident in relation to its notes business involving 969 million yuan, while bigger rival Agricultural Bank of China Ltd. earlier revealed a 3.9 billion yuan case of bill fraud at its Beijing branch.

The China Banking Regulatory Commission this week issued a notice requiring banks to improve their risk controls on commercial bills and check their authenticity, people familiar with the matter said. In one incident, criminals faked a stamp for Longjiang Bank to create false bills and then used them to obtain financing, they said. The CBRC didn’t immediately respond to a fax seeking comment, while a call to Longjiang Bank went unanswered.

Bank of Tianjin, named after the northern Chinese port city in which it’s based, raised almost $950 million selling shares near the bottom end of a marketed range in its Hong Kong initial public offering last month. The stock lost 0.9 percent from its March 30 debut.

— With assistance by Jun Luo

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