Biggest state bank to go public
(Xinhua)
Updated: 2006-05-22 14:10
The Industrial and Commercial Bank of China (ICBC) Chairman Jiang Jianqing
confirmed in Beijing Monday the biggest state bank of China would sell shares to
the public in 2006, following on the heels of the China Construction Bank and
Bank of China in a market listing rush.
"We will materialize an initial
public offering (IPO) and market listing this year," Jiang told a signing
ceremony on building financial ties between the bank and a major domestic steel
plant, but declined to confirm whether his bank would be listed in the domestic
market, which recently soared on improved market sentiment.
Jiang said
he expects the ICBC, by market value, to be among the world top 10 banks, with
2006 business profits exceeding 100 billion yuan.
Chinese banks have
piled up a mountain of problem debts over the past decades due to reckless --
usually government-ordered -- lending to state-owned enterprises, sapping their
competitiveness, analysts acknowledge.
However, they have been shedding
off hefty bad debts, pushing forward joint-stock reform, inviting foreign
investors, trying to secure stock market listings and taking other measures to
help streamline operations in advance of the full opening of China's financial
markets to foreign rivals -- under a commitment to the World Trade Organization
in 2001 -- by the end of this year.
The Bank of China has kicked off an
IPO in Hong Kong slated to be the world's biggest in six years by raising an
estimated 68.07 billion Hong Kong dollars, triggering a buying spree on the
BOC's state bank status and upgraded operation.
Another factor feeding
the frenzy for the BOC is the remarkable success two other big Chinese lenders
that had IPOs in Hong Kong last year.
The share price for the
Construction Bank, the nation's No. 4 lender, has shot up 50 percent since its
IPO in late October, while the share price of the Bank of Communications, the
fifth-largest, has nearly doubled since it hit the market in June.
Banks
had fears that the longtime bearish domestic market, allegedly plagued by market
manipulation and other abuses, might not be an ideal choice for them, but
China's share prices have been surging in recent months on the back of policy
support and fresh fund inflows.
The ICBC became a joint-stock company in
October, assuming all business and relevant assets and debts of the former
solely state-owned bank, with the Ministry of Finance and Central Huijin
Investment Co. Ltd., a central government investment arm, each holding a 50
percent stake.
Months later, a foreign trio of Goldman Sachs, American
Express and Allianz Group paid a combined 3.78 billion U.S. dollars for a 8.89
percent stake in the ICBC, the biggest-ever amount of foreign investment in
China's banking industry.
The ICBC now boasts 18,000 business outlets in
China's mainland, serving more than 4 million enterprises and more than 100
million individual clients.
Its capital adequacy ratio (CAR), the
measure of its available capital in proportion to its outstanding loans, rose to
10.26 percent by the end of last year, already above the 8 percent requirement
by the international standard.
The bank's non-performing loan ratio fell
to 4.43 percent by 2005, coming closer to the 1-2 percent level reported by
sophisticated foreign banks.
(For more biz stories, please visit Industry Updates)
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