China CITIC Bank Corp Ltd, the country's seventh-largest
commercial lender, began marketing its Shanghai and Hong Kong
initial public offering (IPO) of 7.2 billion shares yesterday.
CITIC Bank is the second Chinese firm to list simultaneously in
Hong Kong and Shanghai after the Industrial and Commercial Bank of
China floated in October.
The bank plans to issue 2.3 billion A shares and 4.88 billion H
shares, with a greenshoe option to exercise a 15 percent
over-allotment for H shares in case of oversubscription, according
to the bank's prospectus to the China Securities Regulatory
Commission. The capital raised will be used to supplement the
bank's capital.
The bank began its H-share roadshow in Beijing, Shanghai,
Shenzhen and Guangzhou yesterday. It is expected to set the issue
price on April 20. The A and H shares will be priced the same after
the currency exchange rate is allowed for, the bank said.
Analysts said CITIC Bank had a unique advantage over other banks
because of its parent firm CITIC Group, a large state-owned company
involved in the financial, real estate, information and
infrastructure industries.
"It will be easy for CITIC Bank to expand the scope of its
financial services in the future after government approval," said
Ren Zhuang, an analyst at Industrial Securities. "It is potentially
a big advantage for CITIC Bank."
CITIC Group will lower its stake in the bank's shares from 80
percent to 63.71 percent after the listing, while the two other
major shareholders, CIFH and BBVA, will retain their stakes of
15.17 percent and 4.83 percent. CIFH is majority-owned by CITIC
Group. BBVA is a foreign financial services provider.
The bank posted a 25 percent net profit increase to 3.86 billion
yuan in 2006 from 2005. It forecast a further increase of 53
percent to 5.6 billion yuan for 2007.
"The bank's past performance is good in the retail banking
business, but it still has a higher bad-loans ratio compared with
other joint-stock banks," said Ren. The bank's non-performing loans
ratio was 2.5 percent in 2006, higher than that of most joint-stock
banks like China Merchants Bank and Shanghai Pudong Development
Bank, which are under 2 percent.
The bank's outstanding personal deposits amounted to 105.9
billion yuan in 2006, ranking it second of all national commercial
banks, according to the prospectus.
CITIC bank is expected to begin trading on April 27, making it
the first large-cap IPO in the past two months to list on the
Shanghai Stock Exchange, after Ping An of China, which began
trading on March 1.
"The bank's IPO is also a sign that lots of IPOs with large
capitalization may be announced in the next few months, including
Bank of Communications and China Mobile," said Zhang Yidong, an
analyst at Industrial Securities.
Bank of Communications will reportedly get approval to list in
Shanghai by July this year.
(China Daily April 5, 2007)