Agricultural Bank of China - one of China's leading banks - is facing losses amounting to 4 billion Yuan (around 600 million US dollars) on account of an in-house scandal.
According to reports by China.org, two employees at Agricultural Bank of China's Beijing branch illegally sold bills to an agent in Chongqing. This agent then re-sold those bills to another bank.
The employees then invested proceeds from sale in stock market and suffered huge losses due to a plunge in share prices. China.org reported that Shanghai Composite Index, which had earlier peaked at 5718 points, halved on day of unfortunate incident at 2916 points.
Bills of exchange work in a similar way as post-dated warrants. Once sold, they require the seller to pay a fixed sum to the buyer within a period of time.
Agricultural Bank of China has, however, remained tight lipped about the incident, and has not made any official comments to the press.
Agricultural Bank of China reported this incident in a filing to Shanghai and Hong Kong stock exchanges in January this year. In its filing, Agricultural Bank of China mentioned that they were exposed to risks in 3.915 billion Yuan. Info Seek reported that Agricultural Bank of China has informed Beijing police about this incident, and investigation has already been initiated.
The publication also reported that Agricultural Bank of China has promised full co-operation with authorities during this investigation.
Agricultural Bank of China, also known as AgBank, is one of the four big banks in China, and ranked 3rd in Forbes 2015 list of Top 2000 companies in the world. The said bank is listed on Shanghai and Hong Kong Stock Exchanges.
It is a known fact that banks are no stranger to in-house embezzlements. It can be noted that in 2007 alone, it witnessed the largest robbery in Chinese history. This occurred when two vault managers at bank's Handan branch in Hebei province embezzled over 51 million Yuan.