Corporate governance standards and general operations had improved at the scandal-hit Bank of China (BOC) since Liu Mingkang took the helm, according to a senior official at the bank. 'Our operating profits for last year rose a lot . . . and the bank has not found any new financial irregularities under the new management's leadership,' said the senior official, who asked not to be named. The bank is at pains to distance its leadership from the disgraced regime of former president Wang Xuebing. It is believed to have taken the unusual step of allowing senior officials to talk to the press in an effort to rebuild its image after it was rocked by a series of financial scandals. China's Foreign Ministry last week confirmed that Guangdong branches of the BOC - the mainland's largest foreign-exchange bank - were under investigation after a mainland newspaper reported that six billion yuan (about HK$5.6 billion) had been siphoned off from two branches in the province. Mr Wang, now under investigation in Beijing for approving suspicious loans during his tenure at the bank's New York branch and later as head of the bank, is at the centre of the scandal. Mr Wang was BOC president from December 1993 to February 2000. Last month, he was removed from his post as president of China Construction Bank. The Office of the Comptroller of the Currency (OCC) in the United States and the People's Bank of China (PBOC) took separate actions against the BOC and its New York branch for misconduct. The branch agreed to pay a US$10 million penalty to the OCC and another US$10 million to the PBOC. The official said Mr Liu persuaded the regulators to cut the size of the penalties from US$60 million to US$20 million. The official said most of the misdemeanours were committed many years ago, apart from the irregularities at the Kaiping branch in Guangdong, which were now being investigated. The irregularities at the Kaiping branch continued for almost 10 years and were uncovered by the headquarters last year when the new management introduced a computerised data-processing system that centralised the financial data of all branches across the country, he said. The centralised system increased the headquarters' control over secondary branches, which are the city outlets directly reporting to provincial branches. Before the introduction of the data processing system, the official said the headquarters found it difficult to gather financial data at its secondary branches as it relied on reports from provincial branches. The official said the bank's business had achieved a high growth rate since Mr Liu took the helm in March 2000. In 2000, only 10 provincial branches of its 33 operations, including its headquarters, were profitable. Since then, the number of profitable provincial branches had risen to 14, he said. Of the remaining 19 loss-making branches, nine had seen an improvement in their business. Last month, BOC reported a gross profit of 10.8 billion yuan for the 2001 financial year, a 4.7 per cent rise year on year. The official said the figure had allowed for the 15.3 billion yuan of provisions and eight billion yuan of write-offs mainly on its non-performing loans, which have plagued state-owned commercial banks. 'Stripping out the provisions and write-offs, our operating profits saw dramatic growth,' the official said. 'This is thanks to the bank's reformed internal operational management system.' Non-performing loans dropped by 4.07 per cent last year, and now run at 24.17 per cent. This year, the BOC wanted to reduce its non-performing loan ratio by three percentage points to four percentage points, he said.