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CCB seeks stock market debut in 2005 Zhang Enzhao, board chairman of the China Construction Bank Corporation (CCB), has confirmed that the State-controlled shareholding bank is poised for public listing later this year. He told the bank's annual meeting recently that the banking giant would invite "strategic investors," probably including more sophisticated overseas financial institutions, to acquire its stake and help streamline its operation. The CCB, a financially healthier bank among the country's Big Four which also include the Industrial and Commercial Bank of China, Agricultural Bank of China and Bank of China, was improving its "corporate governance in line with China's domestic situation, " Zhang said. He also vowed to strengthen risk management and internal control so as to "absolutely" curb the resurgence of non- performing loans (NPLs). By the end of last year the bank's problem loans in proportion to its total lending stood at 3.7 percent, the lowest among the Big Four. The Chinese government injected US$22.5 billion into the CCB to bolster its balance sheets at the end of 2003. Partly thanks to subordinated debts, CCB increased its capital adequacy ratio, a measure of its available capital in proportion to its outstanding loans, to 9.39 percent by the end of last year. This is above the 8-percent minimum level set under the Basel Accord for commercial banks, which has been accepted in principle by China's banking regulators. CCB and the Bank of China are leading the government's latest, aggressive program to reform the banking system, highlighted by public listings. Under its commitment to the WTO, China will grant unrestricted market access to foreign banks by 2006. Central authorities hope the listings will make domestic banks more market-oriented and stronger. Decades of reckless lending to money-losing State-owned companies had piled up a mountain of bad debts at the Chinese banks, analysts acknowledged. CCB, which has already split into a holding company and a joint- stock company -- with the latter including all its core operations -- saw its operating profits rise 21.5 percent year-on-year to 49.94 billion yuan (US$6 billion) in the first nine months of 2004. |
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