The share-holding reform of China's two major state-owned banks, China Construction Bank and the Bank of China, has made important strides forward this year.

China Construction Bank established a joint stock listing vehicle on September 21, following the split of the institution into two, while the Bank of China re-organized itself into a joint stock company on August 26.

The two banks won a US$45 billion bail-out from the government in December last year.

The two banks have basically completed their financial reshuffle.

China Construction Bank's bad loan ratio dropped to 3.88 percent by the end of September, from 9.12 percent at the beginning of the year.

Its capital adequacy ratio had reached 9.39 percent at the end of September.

Bank of China's bad asset ratio was 4.55 percent at the end of October, a drop of 0.91 percentage points from the end of June and 11.73 percentage points from the beginning of the year.

Its capital adequacy ratio stood at 8.56 percent at the end of October.

With an aim to further increase its capital strength, optimize the capital structure and diversify ownership, the two banks have plans to usher in foreign company investors as equity owners.

The two banks have all established their board of directors, a clear indication they are trying to improve their corporate governance.

(China Daily December 31, 2004)