A Bank of China (BOC) spokesman confirmed at a
press conference on Tuesday that the leading state bank is seeking
to list later this year.
"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, a BOC spokesman, at a press conference.
His optimism rides on the back of the bank's strong
performance last year. Its operating profits surged from 21.3
percent in 2003 to 57.8 billion yuan (US$7 billion) in 2004. Net
profits amounted to 20.9 billion yuan (US$2.5 billion), on par with
the 2003 figure.
Wang said that the bank's negotiations with
potential strategic investors, who will buy its shares and help
streamline its operations, is "well under way." Citing a
"commercial secret concern," he declined to say which financial
institutions the bank was talking with.
"They are from European and Asian countries, as
well as the United States. The negotiations have made some
progress," he said.
In the last few 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 is now even more urgent as China
prepares to meet its commitments to the World Trade Organization,
including opening its financial markets to foreign competitors by
2006.
The government has selected the BOC and China
Construction Bank (CCB) to spearhead the 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 have introduced the concept of
corporate governance into their operations.
Figures released on 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.
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 either 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
(ABC), 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.
(Xinhua News Agency June 1, 2005)
