Regulatory vigilance within banks to intensify Beijing will encourage strong commercial lenders to speed up diversification into other lucrative financial sectors this year, at the same time heightening regulatory vigilance to ensure an orderly market as freer forces come into play. Last year, the China Banking Regulatory Commission investigated 79,200 bank branches and discovered 860 billion yuan involved in irregularities, triple the profit of the Big Four commercial banks combined. A total of 445 fraudulent banking cases were discovered last year, down 58.4 per cent from 2006. CBRC chairman Liu Mingkang told an annual working conference on Thursday that innovation was highly desirable as the authority strived to bolster growth of mainland banks, according to a summary posted on the regulator's website. But, at the same time, Mr Liu vowed to 'strengthen regulatory control and nip these risks [of irregularities] in the bud'. 'To those banks with strong risk-control capabilities, we should widen appropriately their access [to other sectors],' he said. While Mr Liu (right) did not elaborate on the innovation plan, analysts said the country was likely to let more conglomerates run a complete range of financial businesses, including banking, insurance, securities and asset management. Mr Liu's remarks signal that Beijing is determined to develop world-class financial giants modelled on Citigroup after a drawn-out reform of some of the biggest domestic lenders. In sharp contrast to steep losses at some subprime-plagued global financial institutions, major mainland commercial banks reported a combined profit of 298.7 billion yuan last year, up almost 24 per cent from 2006. Since 2003, Beijing has been revamping its major banks, encouraging them to bring in overseas investors and to go public, a move aimed at boosting their capital adequacy. Four of the major banks - Industrial and Commercial Bank of China, Bank of China, China Construction Bank Corp and Bank of Communications - are traded both in Shanghai and Hong Kong. The average non-performing asset ratio of the four banks stood at 2.87 per cent last year-end and their return on equity ratio hit 16.38 per cent, according to the CBRC summary. 'The figures are pretty eye-catching, even when compared with international big-name counterparts,' said China Securities' banking analyst She Minhua. 'The banking regulators are aiming high because they realise it's time to make a strategic plan to fight off foreign competitors.' Beijing gave the go-ahead to banks early this month to buy into insurers, raising the curtain for removing the firewall put up earlier to control risks. Mr Liu highlighted risk-control in his speech at the conference, vowing to do a better job this year.