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Bank of China, the country's largest foreign exchange lender, said yesterday it plans to adhere to a strict accountability system to ensure the effectiveness of its internal control mechanism.
Spokesman Wang Zhaowen said every member of staff has a duty to reject and disclose illegal business practices.
"An open channel will be established to enable bank staff to conduct effective supervision," he said.
In all cases of illegal business practices, even if they cause the bank to incur financial losses, those responsible will be held accountable, he said.
Managers will also be held accountable if major criminal cases occur at their work units, or if they cannot take measures to close loopholes in their internal control mechanism.
Wang said inspectors that cannot root out existing serious problems, and human resources managers who recruit personnel in illegal ways, will be punished.
"All illegal practices will harm the bank's development capability, and even the bank's existence," Wang said.
Economists say an accountability system is key to the establishment of an internal control mechanism, which Chinese banks must put in place in the face of imminent competition from foreign competitors.
Researcher Wang Zhao of the State Council Development Research Centre said domestic banks have an urgent need to improve their internal control system and corporate governance.
Bank of China, which won a US$22.5 billion capital injection from the State in December 2003, was chosen by the central government as a pilot as part of shareholding reforms. The bank, which reorganized itself into a joint-stock firm last August, is busy preparing for a final initial public offering.
In the bank's annual report announced on May 31, it said its operating profit rose by 21.3 percent to 57.8 billion yuan (US$7 billion) in 2004.
(China Daily June 17, 2005)
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