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Last Updated: Monday, 18 June 2007, 12:45 GMT 13:45 UK
China banks hit for illicit loans
Investors check stock prices at a securities company in Shanghai
Loans to two state bodies were used in share speculation
China's banking regulator has punished eight banks for illicity lending money to two state bodies that invested the cash in the stock and property markets.

The China National Nuclear Corporation and China Shipping Group illegally used the billions of yuan loaned to them.

The China Banking Regulatory Commission (CBRC) has now punished 18 executives involved in the lending with penalties including warnings and fines.

Authorities fear increased speculation may lead to a stock or property bubble.

BANKS INVOLVED IN LOANS
Bank of Communications
China Merchants Bank
Industrial and Commercial Bank of China
Bank of China
Industrial Bank
China CITIC Bank
Bank of Beijing
Shenzhen Development Bank

"The announcement indicates that the government is still worried about a possible overheated stock market as the index continues to rise quickly above the 4,000-point level," said Zheng Weigang, senior analyst at Shanghai Securities.

'Isolated incidents'

Eighteen people from branches of Bank of Communications and Bank of Beijing were issued with reprimands, given fines, or both.

The CBRC fined the Dongdaming branch of China Merchants Bank 1.69 million yuan (221,500; 117,000) and banned it from corporate lending for half a year. The other five were fined up to 500,000 yuan each.

It also said the State-owned Assets Supervision and Administration Commission would punish China Nuclear and China Shipping.

But the banking regulator said the cases found were isolated and did not reflect widespread illicit lending for the purposes of speculative investments.


MARKET DATA - 11:36 UK

FTSE 100
5429.64up
23.70 0.44%
Dax
5733.05up
19.54 0.34%
Cac 40
3784.02up
14.48 0.38%
Dow Jones
10403.79up
78.53 0.76%
Nasdaq
2273.57up
35.31 1.58%
S&P 500
1115.71up
11.22 1.02%
BBC Global 30
5707.15up
20.65 0.36%
Data delayed by at least 15 minutes


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