BEIJING, June 29 (Xinhua) -- The Agricultural Bank of China (ABC) said Thursday it disciplined 1,331 people and prosecuted 21 involved in frauds revealed in the 2004 National Audit Office (NAO) report.

    The giant state lender said in a statement the 64 workers had been dismissed, and many more demoted, fined or subject to other penalties.

    On Monday, the National Audit Office reported that auditors found 51 cases of criminal activities during an investigation of the bank's 2004 financial statements.

    The majority of fraudulent loans, totaling 27.6 billion yuan (3.45 billion U.S. dollars), were for auto and real estate financing, the report said. Some employees had colluded with outsiders to defraud the bank.

    Like other big state banks, the debt-laden ABC is planning to become a joint-stock company and seek market listing to help streamline operations. The bank's long-running problems with irregularities and reckless lending are allegedly severe.

    Under a WTO commitment, China is to fully open its financial market to foreign competition by the end of this year.

    Finance experts interviewed by Xinhua played down the NAO report, saying the situation would improve after the ABC completes its reform process.

    "The report will not affect the Agricultural Bank reform," said Professor Guo Tianyong with the Central University of Finance and Economics.

    He said the NAO audited financial institutions every year. "This time it is targeting the Agricultural Bank. The report only reflects the situation in 2004, and will not have any influence on the current reforms."

    Zhu Yan, a banking analyst with Guoxin Securities, echoed his remarks. Citing an ABC business report released in May, Zhu said, "Actually, the current scenario is already better."

    The ABC has reported its non-performing loan ratio had decreased by 0.56 percent by the end of 2005 from the year earlier, and that its operating profits were 10.5 billion yuan more than 2004.

    Yi Xianrong, a leading finance expert with the Chinese Academy of Social Sciences, a socio-economic think tank, said the ABC would "definitely improve" when its shareholding reforms were underway. Enditem