Bank of China, one the country's Big Four banks, defended its ability to control internal risks as it acknowledged car salesmen used fake documents to amass loans about five years ago.

Bank spokesman Wang Zhaowen said salesmen operating in the northeastern city of Shenyang had forged insurance and collateral-related documents to secure funding from their local Bank of China branch in 2002.

In one instance, one company defrauded Bank of China of 160 million yuan ($21 million) in loans, Wang said in a statement on the bank's Web site (www.boc.cn) over the weekend.

Since discovering the irregularities during an inspection of retail lending practices in Liaoning province, the lender has recovered 120 million yuan from the company and "severely punished" 21 bank executives.

That case "would have no impact on the overall financial situation of Bank of China", Wang said.

Wang said the bank had started training executives on a broad range of risks associated with retail lending and had strengthened related procedures in 2005.

The bank, which raised a combined $13.7 billion through Hong Kong and Shanghai listings last year, has extended more than 200 billion yuan in local currency retail loans. Less than one percent of those loans had been non-performing, he said. ($1=7.674 Yuan)