China Banking Regulatory Commission (CBRC), the country's banking watchdog, has ordered the Bank of China (BOC) to step up its risk control and thoroughly investigate a fraud case that the bank said involve funds worth tens of millions of US dollars.

CBRC said on its website that it was working in cooperation with police in probing the suspected embezzlement at the bank's Hesongjie sub-branch in Harbin, capital of China's northernmost Heilongjiang province.

Director and other staff of the bank division reportedly disappeared. The CBRC said the case had caused grave losses and affected a couple of companies, including a local highway company, Northeast Expressway Co..

"The BOC must look into the incident thoroughly and as soon as possible and severely penalize those caught violating laws and regulations without any mercy," the CBRC said.

The banking watchdog ordered BOC to review its entire operation so as to prevent similar problems.

BOC Spokesman Wang Zhaowen said earlier that daily business was running smoothly and orderly at the bank division.

The BOC will release relevant information in a timely manner, he said.

The BOC is one of China's Big Four state-owned commercial banks. Its Hong Kong subsidiary's shares are traded in Hong Kong and New York and the parent bank is also seeking a stock market debut.

Wang Zhaowen acknowledged that the Hesongjie sub-branch case is a "local" one -- not involving the operation of other BOC divisions. "It will not affect the BOC's reform as a whole," he said.

(Xinhua News Agency February 2, 2005)