China probes CBA’s Chinese partner on fraud involvement

Qilu Bank has been alleged to have received $227mln worth of forged commercial bank bills.

One of the Commonwealth Bank of Australia's part-owned Chinese banks has become embroiled in a $227 million credit scandal which has extended to at least two other banks in the region.

Senior CBA executives here and in China have been briefed about the fraud, which centres on its 20 per cent-owned Qilu Bank based in the city of Jinan, south of Beijing.

Police in Jinan have begun an investigation into Bank of Qilu for reportedly accepting about 1.5 billion yuan ($227 million) worth of forged commercial bank bills - short-term loans issued to corporate customers.

The China Banking Regulatory Commission has also launched an investigation into the matter. CBA has a 20 per cent stake in Qilu, the maximum foreign ownership allowed under Chinese rules.

The fraud highlights growing pains faced by Australian banks as they race to make investments across the Asian region.

View the full story in Sydney Morning Herald.