Posted on Fri, Jan. 30, 2004

Bank of China to Sell Shares in 2005
Associated Press

BEIJING - The Bank of China, one of China's four major state-owned commercial banks, plans to sell its first shares to private investors in 2005, the official Xinhua News Agency on Friday quoted its president as saying.

The announcement of a date for the bank's stock market debut comes four weeks after China announced a $45 billion plan to overhaul the Bank of China and another state bank in preparation for turning them into free-standing, profit-driven corporations.

The bank is "in no hurry to list" shares on a stock exchange until it finishes an overhaul meant to modernize its operations, Xinhua said, citing president Xiao Gang. The report didn't say on which exchange the bank would issue shares.

China is racing to strengthen its state-run banks and financial industries as it prepares to meet a commitment to the World Trade Organization to open its markets to richer, more sophisticated foreign competitors by 2006.

The government says it will use $45 billion from its foreign reserves to shore up the balance sheets of Bank of China and Construction Bank of China. The other two more financially troubled major state commercial banks - Communications Bank of China and Agricultural Bank of China - are expected to get similar injections of money later.

China's banks are trying to clear away a mountain of bad loans after decades of politically dictated lending to unprofitable state companies left them with depleted capital.

In exchange for the new money, the government says Bank of China and Construction Bank are required to speed up reforms aimed at increasing their profitability and creating new consumer services.

Bank of China said its profits rose 9.11 percent last year to 57 billion yuan ($6.9 billion). Foreign experts say that figure would be much lower if more demanding international accounting standards were applied.