China finds $1.2 billion in shady loans at banks

China's auditing watchdog has found that three major banks had extended more than 9.3 billion yuan ($1.2 billion) in questionable loans since 2002, according to the official Xinhua news agency.
The National Audit Office (NAO) found that Bank of China had issued 5.51 billion yuan in problem loans, while Bank of Communications was responsible for 1.94 billion yuan in such loans and China Merchants Bank 1.9 billion yuan. Most of the loans went to unqualified property developers or were fraudulent home mortgages, Xinhua cited the NAO as saying.
Both BoCom and Bank of China had previously said that an audit by the auditor had uncovered irregularities in their operations, but they did not provide specific figures.
The audit office has vowed to tighten its oversight of banks and financial firms, aiming to beef up their risk controls amid a government crackdown on bank loans going illegally into the country's red-hot stock market and property sector.