Ernst & Young Global has withdrawn a report it issued in early May, saying that its dollar estimate of the bad loans held by China's major state-sponsored banks was "factually erroneous."

In a May 3 report, E&Y said that China's banks were facing up to $911 billion in bad loans. At the end of March, the Chinese government had reported total outstanding nonperforming loans of approximately $164 billion. The government has said that about $133 million of that amount is held by its four major state banks -- a figure much lower than in past years due to large write-offs of bad loans. The Ernst & Young report had put the big banks' share at approximately $385 billion.

"Upon further research, Ernst & Young Global finds that this number cannot be supported and believes it to be factually erroneous," the company said in a statement. "[The report] did not go through our normal internal review and approval process before it was released to the public and, as it contains errors, we are withdrawing the report."

In follow-up statement, Ernst & Young has said that the major problem was that the report treated unverified forecast data as historic information. Spokespeople for the accounting firm have said that it was not pressured by the Chinese government to retract its report, and that a revised report will be issued by mid-June.

The Bank of China, the country's second-largest lender, plans to list on the Hong Kong Stock Exchange on June 1, in a nearly $10-billion initial public offering. Several other banks are planning IPOs later this year.

In published reports, economists have said that it is nearly impossible to gauge the amount of potentially bad debt held by Chinese lenders, and that the figure cited in Ernst & Young's report was not as high as some estimates by international economists.

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