The Bank of China's ambitions to list in New York will not be formally hampered by the announcement on Friday of US$20 million in penalties for misconduct by earlier management in America, according to US Treasury Department officials. The penalties - US$10 million each to the department's Office of the Comptroller of the Currency and the People's Bank of China - did not reflect the present operation of the bank, one official said yesterday. 'What we are talking about here is events that are past events . . . there is nothing in terms of federal regulation that would stop the Bank of China going ahead with any plans it may have to list here,' the official said. 'An entirely new management is now in place and a range of new management systems are now in operation.' The office routinely monitors the operations of 59 foreign banks trading in the US and the penalties are among the largest civil fines it has levied. The Bank of China's Hong Kong branch has been planning a multi-billion dollar listing in both New York and Hong Kong to help cement its position as China's most international bank. But some analysts believe the deal will now be seen as a 'hard sell' given the dramatic events of last week. 'The US fine, and a couple of other local issues, will definitely delay the listing plans somewhat,' said one Hong Kong analyst, on condition of anonymity. 'They still have some internal things to clear out.' Other local sources suggested top management was considering putting back the plans until certain issues had been addressed and circumstances were more favourable. The announcement followed confirmation in Beijing last week that Wang Xuebing had been dumped as head of the China Construction Bank due to ongoing investigations into loans made during his earlier tenure as president of the Bank of China. US Treasury Department sources said the American side of the investigation - made with full co-operation from Beijing - centred on events linked to Mr Wang, who headed the New York branch between 1989 and 1993. He was not named in the statement, which warned of 'significant losses' to one of two New York branches of the Bank of China, which also has an office in Los Angeles. 'The misconduct . . . included showing preferential treatment to certain customers of the New York branch who had personal relationships with some members of the New York branch's prior management,' the statement said. 'The Office of the Comptroller of Currency had a number of other concerns about the Bank of China's US branches under the former bank management, including large exposures to a single borrower, the facilitation of a fraudulent letter-of-credit scheme, the facilitation of a loan fraud scheme, the unauthorised release of collateral and the concealment of that action, and other suspicious activity and potential fraud.' It said a range of anti-fraud and credit practices had now been implemented. They included a ban on 34 individuals and firms as well as tougher measures to better identify account owners and 'beneficial owners'. The office statement included a message from current Bank of China president Liu Mingkang, acknowledging misconduct at the New York branch between 1991 and 1999. The penalties and various measures demanded by the office and the People's Bank of China would be 'conducive to the healthy development of the branch', he said. 'The new management of the Bank of China has taken active measures to seriously remedy the past imprudent and unsafe management, and has made periodic achievements, including penalties against responsible persons,' Mr Liu said. 'Since March 2000, under the leadership of new management, the Bank of China embarked on . . . processes to ensure good corporate governance, enhanced information disclosure and the identification of deficiencies in our management and operations, including the recognition of the misconduct of the prior management of the New York branch over the past decade. 'Through the changes implemented by new management, the Bank of China is ruling out managerial deficiencies that might cause similar problems.'