SHANGHAI, Jan. 13 (UPI) -- The head of one of China's big four state-owned banks was fired last week amid allegations of financial wrongdoings during his former tenure as the governor of the Bank of China, bank officials and industry executives said.
Wang Xuebing, president and chief executive officer of China Construction Bank, was dismissed on Friday, a spokeswoman for the bank in Shanghai confirmed over the weekend.
"We have received notification from our central offices in Beijing that Mr. Wang will be replaced," said the spokeswoman, who only gave her surname Liu. "At this time, we cannot comment on the circumstances surrounding his dismissal, other than to say that he is no longer in control."
Employees at the bank's numerous mainland branches were informed on Saturday that Zhang Enzhao, the bank's deputy president, would replace Wang, she said.
Wang is also chairman of China International Capital Corp., one of the country's top joint-venture foreign investment banking firms.
CICC, which deals mostly in investment banking sales and trading, is a joint venture between China Construction Bank, Morgan Stanley, China National Investment and Guaranty Corp Ltd., Government of Singapore Investment Corp Ltd. and the Mingly Corp Ltd.
While bank officials refused to say whether Wang had been arrested, speculation in banking circles over his possible indictment in a criminal probe have been circulating for weeks.
"The government is looking into whether Wang had knowledge of or was somehow involved in some of the banking scandals that took place while he was head of the Bank of China," said Li Xiangli, a banking industry analyst with Haitong Securities in Shanghai.
"It is likely that he has been implicated or is at least being held responsible," he said.
In the mid-1990s, several of China's major banks, including the BOC, are alleged to have illegally loaned millions of dollars to securities firms, which invested the money in the stock market for the banks.
A probe of the banking scandal revealed that bank officials and securities firms had been reaping millions in profit from the country's two highly speculative bourses.
The subsequent government crackdown drained liquidity from China's fledging stock market, as jittery investors sparked a major sell-off.
Wang is the second senior banking official to be fired since the government embarked on a major anti-corruption investigation of the troubled banking industry several years ago.
Zhu Xiaohua, former deputy governor of the People's Bank of China, was fired in 1999 after a probe of alleged corruption discovered financial irregularities under his watch.
Wang, a member of China's Communist Party Central Committee, is also said to be a close personal advisor to Chinese Premier Zhu Rongji.
He served briefly as vice president and managing director of China Everbright Group, and later returned to the BOC to serve as president and vice chairman.
During his tenure at the BOC, which lasted more than a decade, Wang expanded the bank's operations and transformed it from a policy institution to a quasi-commercial bank.
He increased lending to high-tech projects and import-export companies in rapid growth areas, and approved loans to university high-tech parks to support China's knowledge economy.
Wang took over the helm of China Construction Bank more than two years ago, and introduced new products, such as sureties-backed loans, while offering special bank services for insurers to bolster cooperation between financial institutions.
Some analysts said move is indicative of Beijing's rowing frustration at the slow pace of reforms in the troubled state-owned banking sector.
"The state banks are struggling to gain a foothold, while the government is busy fighting graft and corruption," said Jimmy Xu, a banking industry analyst for HSBC in Beijing.
Despite more than two decades of reform, China's banking system is still mired in debt from non-performing loans, many of which date back to the Asian financial crisis of 1997. Analysts say the state banking sector is essentially insolvent, and attempts to clean it up have had limited impact.
The four big state-owned commercial banks -- the Bank of China, the Agricultural Bank of China, the Industrial and Commercial Bank of China, along with the China Construction Bank -- control an overwhelming share of the domestic market.
In recent years, the government has taken steps to shore up the four banks, including setting up four asset management firms to alleviate the burden of non-performing loans.
Although the banks have been able to alleviate some of the debt, by auctioning off portions to foreign firms, the losses remain on the books of the government.
Like the other three state-owned banks, the China Construction Bank has a heavy load of non-performing loans, many of which date back a decade.
