Image copyright Getty Images Image caption Birmingham City defender Mitch Hancox vies with Blyth Spartans' Jordan Watson in a FA Cup match earlier this month

The company that owns Birmingham City FC said it believed a former employee may have "misappropriated" £2.5m.

Birmingham International Holdings said on Monday afternoon that it had reported the matter to the Hong Kong police, who were investigating.

The company said in a statement that the loss "may have a material impact on the operation and financial situation of the group".

It was also concerned that the matter was apparently missed by auditors.

Shares in the Hong Kong-based company were suspended six weeks ago and will not resume trading until further notice.

Hong Kong-based Birmingham International Holdings said it would consider setting up an investigation committee to examine the suspected misappropriation and determine how to improve its internal controls.

The Championship club stand at 11th on the table and narrowly avoided relegation last season, staying up on goal difference only.

The 2011 League Cup winners were relegated from the Premier League the same year.

'Shadow director'

The former owner of Birmingham City, Carson Yeung, was convicted of money laundering in his native Hong Kong in March and jailed for six years.

He resigned in February 2014 as president of Birmingham City FC, director of Birmingham City plc and director and chairman of Birmingham International Holdings.

Yeung, who has lodged an appeal against his conviction, remains the club's major shareholder.

Last week, it emerged that Yeung had requested to remove three directors of Birmingham International Holdings and replace them with three of his own nominations.

The company has asked the Hong Kong Stock Exchange to investigate Yeung's request.

Supporters of Birmingham City have called on the Football League to investigate concerns that the former owner was acting as a "shadow director".

A Football League spokesman said it had been in "ongoing dialogue with the club in recent months".