Shares in China Construction Bank (CCB) will start being traded in Hong Kong on October 27 following the bank's global launch of this year's biggest initial public offering (IPO), according to Monday's China Securities Journal.
The newspaper, run by Xinhua News Agency, said the IPO may raise US$6.1-7.7 billion and said shares will be priced in a range of HK$1.80-2.25 (23-29 US cents) and that the CCB share trading number on the Hong Kong stock exchange would be 0939.
CCB has declined to comment, but media reports about its overseas market listing abound.
The IPO would be the biggest-ever of any Chinese enterprise, eclipsing another mainland bank, Bank of Communications, which offered shares at 1.6 times book value in its US$1.9 billion IPO last June.
The paper reported that CCB board chairman Guo Shuqing was busy launching his bank's roadshow for institutional investors in leading US and European financial hubs ahead of the bank's retail share sale.
Citing sources familiar with the CCB move, the paper said that shares for institutional investors, accounting for 95 percent of the bank's planned total, have been fully booked. "Considering the hot market response, the CCB may price its shares at the upper end of the range."
Book runners for the deal include Credit Suisse First Boston Corp., China International Capital Corp. and Morgan Stanley.
In China, authorities have been encouraging Chinese banks to seek foreign partnerships in order to build up their capital and improve management before China fully opens its banking industry to foreign competition in late 2006.
Current limits cap equity stakes in a Chinese bank by any one foreign institution at 20 percent, with total foreign holdings limited to a maximum of 25 percent. Those limits are apparently aimed at preserving state control of major lenders, industry observers said.
China's banks have long struggled with severe debt problems, a major hangover from the country's central planning days when easy credit was granted without concern about repayment of the loans.
CCB would be the first of China's big four state-owned banks, which includes Bank of China, the Agricultural Bank of China and the Industrial and Commercial Bank of China, to list shares overseas.
In December 2003, the CCB and Bank of China received US$22.5 billion each from the central government to tidy up their balance sheets.
Regulators hope that pushing state banks to go public will bring greater transparency to the sector.
In 2004, CCB's pre-tax profits reached 50.22 billion yuan (US$6.19billion). Its capital adequacy ratio, a measure of its available capital in proportion to its outstanding loans, reached 11.29 percent, significantly above the international 8 percent requirement.
(Xinhua News Agency October 11, 2005)
