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Bank of China trying to list this year
(Xinhua)
Updated: 2005-06-01 15:59
A Bank of China (BOC) spokesman confirmed Tuesday that the State-owned
leading bank is seeking to offer shares in 2005.
"We are making active preparations for the market listing, but the
share-offering depends on an opportunity and window to the market. We are doing
our best (to list this year)," said Wang Zhaowen, the BOC spokesman, at a press
conference.
His optimism could be built on the bank's strong performance in 2004. The
bank posted its operating profits figure last year, which surged 21.3 percent
year-on-year to 57.8 billion yuan (US$7 billion). The BOC's 2004 net profits
were level with 2003, amounting to 20.9 billion yuan (US$2.5 billion).
Wang said that the bank's negotiation with potential strategic investors, who
will buy its shares and help streamline its operation, is "well under way."
Citing a "commercial secret concern," he declined to say which financial
institutions the bank was talking to.
"They are from European and Asian countries, as well as the United States.
The negotiation has made some progress," he said.
In the past decades, China's State banks were treated as a source of money to
prop up failing government companies. This has left them debt-ridden and with
little capital to meet regulator requirements, analysts say.
Bank reform has been more urgent as China prepares to meet commitments to the
World Trade Organization, opening its financial markets to foreign competitors
by 2006.
The country has selected the BOC and China Construction Bank (CCB) as pilot
banks in sweeping reforms. At the end of 2003, the two received a combined US$45
billion in foreign exchange reserves from the central government in a bailout
plan to help boost their capital bases.
Both BOC and CCB have been transformed into joint-stock enterprises and
introduced corporate governance featured by a shareholders' meeting, board of
directors, board of supervisors and senior management.
Figures released Tuesday show that the BOC's capital adequacy ratio, a
measure of its own capital to total lending, had climbed to 10.04 percent by the
end of last year. This is above the 8 percent international requirement for a
commercial bank.
Its non-performing loan (NPL) ratio stood at 5.12 percent, as compared to the
1 to 2 percent level recorded by famous foreign banks.
Guo Shuqing, the CCB chairman, said earlier that his bank had finished its
prospectus for listing and is also trying to go public this year.
Industrial insiders predict that the BOC and CCB will list in Hong Kong, New
York or London.
The China Banking Regulatory Commission has said the reform of the two other
State banks, the Industrial and Commercial Bank of China (ICBC) and Agricultural
Bank of China, would also be advanced.
Last month, China announced plans to inject US$15 billion into the ICBC, the
country's biggest State-owned commercial bank, in a bid to turn it into a
profitable, independent competitor. The bank will use the money to replenish its
financial reserves.
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