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Two of China's four largest state-owned banks said Friday they would sell shares to the public in 2006 as they gird for increased competition from foreign lenders.
Industrial and Commercial Bank of China (ICBC), China's biggest bank, plans an initial public offering at an "appropriate time" next year, vice president Yang Kaisheng told a World Economic Forum conference.
ICBC had previously held out the possibility that the share sale might not happen until 2007. As a prelude to the IPO, the bank planned to set up a joint stockholding company next month, Yang said.
Bank of China (BOC), the country's largest foreign-exchange bank, said its own long-awaited initial public offering would take place in the first half of next year.
Bank of China named Goldman Sachs and UBS on Aug. 30 to manage the lender's planned stock listing, one of the most sought-after IPO underwriting jobs in years.
"We have laid all the groundwork for the IPO, which we expect in the first half of 2006," vice chairman Li Lihui told the meeting.
Neither banker gave any details of where they would list their shares or how much they hoped to raise.
Both banks are likely to be beaten to the IPO post by China Construction Bank (CCB), the country's top property lender.
All three banks have been enlisting strategic foreign investors to bring them cash and badly needed expertise ahead of the opening up of China's domestic banking market to foreign lenders in late 2006.
"The participation of foreign banks can play a very important role. They can help us change our operations and culture," Yang said.
The going rate for a 10 percent stake in all three is around $3 billion.
Bank of America and Singapore's state investment agency, Temasek Holdings, have bought 9.0 percent and 5.1 percent respectively of CCB.
Bankers have said Goldman Sachs, Allianz and American Express are looking to buy 10 percent of ICBC.
Yang declined to give names but said ICBC would close a deal with suitors by the end of the year.
Bank of China has sold two stakes of 10 percent each to Temasek and to a consortium led by Royal Bank of Scotland Group Plc.
Those two deals mean only 5 percent of BOC remains up for grabs for overseas investors as China caps foreign stakes in a domestic bank at 25 percent.
A senior banking regulator sidestepped a question as to whether China would consider increasing the 25 percent cap.
"It's a step-by-step process," said Wang Zhaoxing, assistant chairman of the China Banking Regulatory Commission.
"The supervisors and the central government should take some time to assess the results and the progress from this policy. We need some careful assessment and then maybe we will go forward and implement a new policy," Wang said.
(Shenzhen Daily September 12, 2005)
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