The Chinese banking industry regulator said Monday it has punished the branches of eight local banks for failing to prevent their two clients from appropriating loans of 4.46 billion yuan.

The eight banks concerned are the Bank of Beijing, the Beijing branch of Bank of Communications and the Shanghai outlets of China Merchants Bank, Industrial and Commercial Bank of China, China CITIC Bank, Bank of China, China Industrial Bank and Shenzhen Development Bank.

The China Nuclear Engineering and Construction (Group) Corporation (CNECC) have embezzled more than 2.06 billion yuan of loans to finance its real estate subsidiaries and invest in the securities market, according the China Banking Regulatory Commission (CBRC).

The CNECC gained loans of nearly 2.37 billion yuan in the name of building nuclear power stations from the Bank of Communications and the Bank of Beijing starting from 2001. Investigations showed about 87.32 percent of the loans was used for other purposes including real estate and securities investment.

The China Shipping (Group) Company have misappropriated 2.4 billion yuan of loans in applying for new shares.

The company have been granted 2.7 billion yuan of loans by outlets of the six banks listed above since June 2006. It used 2.4 billion yuan of the loan to buy new shares in the country's booming stock market.

In the case of the CNECC, 18 people from the Bank of Communications and the Bank of Beijing were punished and 12 of them were fined. The CBRC did not reveal the sum of the fine.

The Shanghai branch of China Merchants Bank was fined 1.69 million yuan for slack supervision in the case of China Shipping (Group) Company. The other five local banks concerned were each given a fine of below 500,000 yuan.

The CBRC also disqualified some senior executives of thelocal banks.

(1 dollar=7.62 yuan)