Industrial Bank could issue A shares
By Zhang Ran (China Daily)
Updated: 2006-05-25 08:58
The Industrial Bank Co Ltd is expected to be one of the first banks to issue
A shares in the domestic securities market after the government lifted the
year-long ban on initial public offerings (IPOs).
Li Renjie, president of
the joint stock commercial bank, said yesterday it is likely to be among the
first batch of banks to launch IPOs in the domestic bourse since the government
resumed IPOs last week.
He gave no details of when shares might be
issued but said the bank passed IPO application materials to the China
Securities Regulatory Commission at the end of last year. Li was speaking
yesterday at the 2006 Financial Summit organized by the Ninth China Beijing
Hi-tech Expo.
Li did not mention how many A shares could be issued, but
when asked whether the figure would exceed 10 billon yuan (US$1.25 billion), he
said "probably". The bank, based in Fuzhou, the capital city of East
China's Fujian Province, is a joint venture between the Fujian government and
several shareholders. It had total equity of 12.115 billion yuan (US$1.514
billion) and an 8.18 per cent capital adequacy ratio at the end of
2005.
China already has five commercial banks which have issued A shares
on the domestic bourse China Merchants Bank, China Minsheng Banking Corp,
China Huaxia Bank, Shanghai Pudong Development Bank and Shenzhen Development
Bank.
Their annual financial reports showed net profits rose well
in 2005.
Statistics from domestic financial magazine the Banker showed
that until the third quarter of 2005, 10 of China's 14 commercial banks' capital
adequacy ratios had reached the 8 per cent minimum requirement. (Four of the 14
are State-owned; the other 10 are joint venture commercial banks, of which the
Industrial Bank is one.)
However, the statistics also showed that although
the capital adequacy ratio of two banks had reached 11.2 per cent and 13.57 per
cent respectively, other banks' ratios were only just above 8 per cent.
Even though joint venture banks tend to show better financial results
and are more competitive, they may face more problems than State-owned banks due
to a lack of capital sources, the Banker said.
According to Li, the bank
thought about issuing H shares in Hong Kong. He also said the bank would
co-operate with small financial institutions.
The Industrial Bank is one
of the 10 major national joint stock commercial banks in China. Formerly named
the Fujian Industrial Bank, it was founded in 1998. It reported outstanding
deposits of 350 billion yuan (US$43.75 billion) and outstanding loans of 243
billion yuan (US$30.37 billion) at the end of 2005.
The Industrial Bank
doubled its gross assets to 474 billion yuan (US$59.25 billion) in late 2003
when it introduced three foreign strategic investors Hang Seng Bank of
Hong Kong, International Finance Corporation and the Government of Singapore
Investment Corporation involving an equity expansion of up to 2.697
billion yuan (US$337.1 million).
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