BEIJING, Mar. 18 -- The head of one of China's largest state commercial banks has quit unexpectedly amid corruption allegations. Analysts say the incident comes at a difficult time for the company, with its Hong Kong listing due later this year. However it also shows the government's determination to curb corruption in the industry.

    China Construction Bank, the country's top housing lender, said on Wednesday that chairman Zhang Enzhao had resigned for "personal reasons", but did not elaborate.

    However, there are reports that the 58-year-old Zhang Enzhao has been investigated, amid allegations of corruption at the bank.

    Chinese banks have been plagued by several corruption scandals in recent years, leading the government to identify banking reform as a key priority.

    Wang Xuebing, former president of China Construction Bank, was jailed for 12 years for corruption in 2003 for offences committed while he ran the Bank of China.

    Professor Mao Shoulong is from Department of Public Administration at Renmin University of China.

    He said that the incident will have a negative impact on the bank, which plans to initiate public offering overseas later this year.

    "It definitely has negative effect on investors in terms of corporate image and the confidence on its reform process. His resignation and the related investigation raise doubts about the effect of corporate governance reform in the bank," according to Mao. 

    Chinese banks are seeking to clean up their image as they try to raise capital by listing their shares overseas.

    In a statement, China Construction Bank said that it would "move forward with improvement of its governing structure and accelerate reform of its management mechanisms".

    Professor Mao Shoulong considers the resignation of chairman Zhang Enzhao partially the result of such reform.

    "It shows the determination to curb corruption during the structural reform. For the bank itself, it is also part of the process of supervising the organization. So it has a positive effect from this point of view," Mao said. 

    China Construction Bank and Bank of China, also looking to list overseas, shared a 45 billion US dollar state bailout in 2003 to improve their balance sheets, ahead of a potential stock market float.

    But the reform as well as a string of recent scandals obviously poses a risk for international investors considering buying the two banks' shares.

    However professor Mao Shoulong has a different view, "I think the incident, as well as being a worry, indicates that most investors have high expectations for the listed company. It can also help build up mutual trust between the bank and the market. Exposing and solving the risk is the basis for building trust. You have to give long-term confidence to your investors."

    He also said that getting the major internal control problems solved before the bank's IPO could lower the risk for the investors.

(Source: CRIENGLISH.com)