The Bank of China’s IPO has exceeded expectations, with the lender’s share price rising 15 percent on the first day of trading. As well as being positive for early investors like Royal Bank of Scotland, it is good news for the country’s banking sector. Increased foreign investment should improve bank management and lending practices while the inflow will help its balance sheet.

This has worked relatively well for the Citigroup-invested Shanghai Pudong Development Bank (SPDB). … relatively:

THREE ILLITERATE peasants are in court this week accused of fleecing 82 million RMB from the Shanghai Pudong Development Bank through the use of forged PLA documents. 66 million RMB has already been frittered away, according to reports.

The black hole in the bank’s finances was discovered at the end of 2004 at its Beijing branch. It turns out that the 82 million RMB loan was signed off by the vice-chief of the branch without going through the required approval procedures. The vice-chief, Yu Tianlai, was sentenced to six years in prison last year. He said that he approved the loan because he wanted to take credit for a particularly large piece of business.

Yu admitted that the money was transferred to something called the Shanghai Zhisheng Chemical Company, which had presented accreditation documents from the Central Military Commission, saying that the company was responsible for decommissioning PLA materiel but needed a mortgage.

The man alleged to be responsible is 51 year-old Liu Shulin, a farmer who became a construction worker in Beijing.

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