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The Industrial and Commercial Bank of China (ICBC) is stepping up its restructuring to prepare the ground for its initial public offering, according to a senior bank official.
ICBC Vice-President Yang Kaisheng told the 2005 Financial Conference in Beijing: "We are making greater efforts to clear up non-performing loans." Last year, the bank brought down its ratio of non-performing loans by 2 percent to 19.1 percent.
Analysts say ICBC may receive a capital injection as high as US$50 billion from the government. In 2003, Bank of China (BOC) and the China Construction Bank (CCB), two pilot banks among the "big four" to go public, received a combined capital injection of US$45 billion from the People's Bank of China, the nation's central bank.
But market observers warn that the two pilot banks, if both considering a Hong Kong listing, may have to deal with another obstacle, as the Central Huijin Investment Co is the controlling shareholder in both banks, this may disqualify them from listings, according to Hong Kong Stock Exchange rules.
However, "the government will solve this problem and the two banks will qualify for a Hong Kong listing," Yang said confidently.
For ICBC, there is another option - the Ministry of Finance may inject capital by issuing special bonds, according to industry insiders.
Central bank officials said earlier the government will take different measures in restructuring the "big four State commercial lenders."
The central bank is also trying to reduce risks in the banking industry by raising both the mortgage rate and maximum downpayment levels.
Commercial banks are required to charge mortgage rates of no less than 90 percent of the central bank's benchmark interest rate, and it raised the downpayment limit from 20 to 30 percent. Confronted with a potential property bubble, "the measure is expected to help reduce risks in the banking sector, as more than 60 percent of real estate developers' finances come from commercial banks," Wu Xiaoling, vice-governor of the central bank, told the conference.
(China Daily March 21, 2005)
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