Bank of Communications to Go Public

The Shanghai-based Bank of Communications (BoCom) will seek a domestic listing and a stronger presence in the country's relatively developed areas this year.

Bank President Wang Mingquan said the bank will first replenish its capital.

Flotation of debentures worth 5 billion yuan (US$600 million) are being considered among the options in its recapitalization plan, he said. Debentures are bonds issued to institutions.

The bank will also prepare to issue shares to individuals and go public on a domestic bourse, he said.

The bank was set up in 1988. It was the country's first shareholding bank, with investment from the central government and State enterprises.

Following the establishment of BoCom, about 10 share-holding commercial banks were launched in China to compete with the four wholly State-owned commercial banks.

In the face of tougher competition brought about by the country's economic restructuring and expected after China's entry into the World Trade Organization, the shareholding banks have been seeking ways to get stronger and more competitive.

Almost all of them have or are considering recapitalization plans and getting listed as ways to consolidate their positions in the banking sector.

The Shenzhen Development Bank was China's first listed bank. Listing of the bank, which occurred in the early 1990s, was treated as an exceptional and experimental case by the financial authorities.

The new listing wave in the banking sector began during the first half of last year, when the Shanghai Pudong Development Bank was listed at the Shanghai Stock Exchange.

Reports said the China Minsheng Banking Corporation, which is China's only private bank, and the Huaxia Bank, quickly followed in the footsteps of the Shanghai bank to prepare their listing plans.

Wang of BoCom said his bank will use funds raised to expand its East China operations. Areas around Shanghai and Guangzhou and the cities of Beijing and Tianjin have been given top priority, he said.

In 1999, its outstanding renminbi deposits grew by 12 per cent to 340 billion yuan (US$41 billion), while its outstanding loans in local currency expanded by 13.4 per cent to 243.5 billion yuan (US$29.3 billion).

Its domestic business profits topped 2.5 billion yuan (US$300 million) last year.

(Source: CIEC)

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