Bank of China, the country's largest foreign exchange bank, said
yesterday it would issue up to 12 billion yuan (US$1.45 billion) in
subordinated debt on Friday.
The bank plans to issue 8 billion yuan (US$963
million) in 10-year fixed-coupon
bonds
. But it reserved the option to expand that to 12
billion yuan (US$1.45 billion), depending on investor demand.
This would be the second sale of this type of debt
by the bank to replenish
its capital base ahead of a planned initial public offering.
The bank issued 14.07 billion yuan (US$1.7 billion) in subordinated
bonds in the first sale of such bonds in July. The bonds rank after other
bank liabilities in terms of claims on bank assets.
After issuing the two groups of bond, the bank's capital adequacy level
would reach about 9 per cent, according to bank spokesman Wang Zhaowen.
In order to increase the bank's capital strength, optimize the capital
structure and diversify ownership, the bank would also usher in foreign
company investors as its equity owners.
"We have made a major progress in picking up strategic investors. We
have set our targets," said Wang, who declined to elaborate.
"The final announcement should be made before the end of this year," he
said.
The bank, which received a US$22.5 billion cash
injection from the government in late December, was chosen by the central
government as a pilot project to turn it into a joint stock bank
.
In August, the bank reorganized itself into a joint stock company,
following the establishment of Bank of China Limited.
The joint stock company, which has registered capital of 186.39 billion
yuan (US$22.5 billion), took control of all of Bank of China's assets,
debts, employees and business.
Central Huijin Investment Co Ltd holds 100 per cent of company's shares
on behalf of the Chinese Government.
Bank President Li Lihui said earlier that Bank of China aimed to list
shares in the second half of next year.
"We will be listed at a proper time next year," he said. "The earliest
time for this would be the second half of next year."
However, Li said improving the bank's financial strength should be the
primary aim of the bank's reforms, rather than the initial public
offering.
The bank's bad asset ratio fell to 5.16 per cent by the end of last
month, down from 5.46 per cent at the end of June. The ratio stood at 16.3
per cent at the start of the year.
The bank's capital adequacy ratio, a measure of how much capital it has
in relation to assets, rose to 8.39 per cent at the end of last month from
7.9 per cent at the end of June, Wang said.
Operating profits in the first nine months reached 48 billion yuan
(US$5.8 billion), up 23.7 per cent year-on-year.
With an aim to increase its profits, the bank yesterday began to issue
its first dual-currency credit card.
Niu Li, a senior economist at the State Information Centre, said
Chinese commercial banks would have to sharpen their competitive edge
before foreign banks obtain unrestricted access to the Chinese market at
the end of 2006.
The banks would have to lower their non-performing loans, ditch
historical financial burdens and raise their capital adequacy levels to
international standards, he said.
China Construction Bank, another State-owned bank chosen by the central
government as a pilot project, said earlier its non-performing assets
ratio dropped 5.69 percentage points from the first quarter of this year
to reach 3.08 per cent at the end of June.
The bank established a joint stock bank last month, following the
splitting of the institution into two parts.
It plans to take a lead among the four largest State-owned banks to get
listed.
(China Daily) |