PBOC Shanghai is not entirely untainted. Last year, it failed to keep a close eye on some financial institutions that were channelling money illegally into stock speculation and were later rapped by Beijing.

Nor is it a model of transparency or openness. Getting its present head, Mao Yingliang, to talk to the foreign media about the state of the industry is as tough as winning a lottery.

But, by and large, the bank regulator tends to err on the side of caution and prudence in its supervision of financial institutions, which serves the country just fine, especially when the national banking system is a terrible mess.

PBOC Shanghai's job is made a little easier because cadres in state and commercial banks in the emerging financial centre are mostly professional bankers and are relatively clean.

Not surprising, therefore, that the city's banks are, based on mainland accounting standards, the most profitable in the country. If only other PBOC branches in the country were as demanding as the Shanghai office and their bank officials less corrupt, Premier Zhu Rongji would have his financial worries halved. Alas, this is not so. If anything, PBOC Shanghai's stringent supervision of the city's generally robust banking system serves to highlight the incompetence and endemic corruption of regulatory and bank officials in Guangdong, the country's most prosperous province, in recent years.

Guangdong was the first to experiment with Deng Xiaoping's open-door policy. That, coupled with its proximity to Hong Kong, meant the province could very quickly reap the fruit of huge trade and investment flows.

What has shocked the central bank in Beijing is that banks in Guangdong as a group lost billions of yuan last year. There were several reasons: PBOC Guangdong was perceived to be negligent, many bank officials were corrupt, and inefficient. For a long time, the province was a kingdom unto itself, the key reason being 'the sky is high and the emperor is far away'.

PBOC officials said central-government edicts were often ignored and attempts to rein in the financial mess were thwarted.

But things appeared to turn against the province when Mr Zhu - with President Jiang Zemin's backing - installed a trusted provincial party cadre, Li Changchun, to become Guangdong Communist Party general secretary.

He is assisted by former China Construction Bank head Wang Qishan, who became the province's executive vice-governor in charge of financial affairs.

Later, Xiao Gang, assistant to PBOC governor Dai Xianglong, was sent over to head PBOC Guangdong branch.

The arrival of the three marked the beginning of a thorough cleansing by Beijing of the province's scandal-ridden financial sector.

The controversial move to close Guangdong International Trust and Investment Corp is but the tip of the iceberg.