Chinese auditors have identified more than 9.3 billion yuan (US$1.2 billion) of questionable loans in three top commercial banks, the National Audit Office (NAO) announced on Friday.

The three banks are the Bank of China (BOC), the nation's second largest bank, the Bank of Communications, the fifth largest, and China Merchants Bank.

Since 2002, the BOC has issued problem loans of 5.51 billion yuan, the Bank of Communications 1.94 billion yuan and China Merchants Bank 1.9 billion yuan.

Most of the loans went to unqualified real estate companies and fraudulent personal mortgages, according to a report released by the NAO on Friday.

The BOC was suspected of 21 cases involving illegal activities, the report said. The Bank of Communications and China Merchants Bank were each suspected of eight such cases.

Last month, the NAO released the annual audit report, showing in 2006 almost seven billion yuan of misappropriated government funds and more than 37 billion yuan being improperly managed.

(Xinhua News Agency July 21, 2007)