ABC to launch expensive joint stock reform
(Xinhua)
Updated: 2006-10-19 10:30
The Agricultural Bank of China (ABC) is close to finalizing a plan with
banking regulators to transform it into a joint stock company, according to Zhou
Xiaochuan, governor of the People's Bank of China.
Regulators have
reached a consensus that the bank will be listed as a whole company, instead of
being broken up into smaller units as was previously reported by some
media.
The reform will cost an estimated 100 billion U.S. dollars, much
more than that of the other three major state-owned commercial banks - the
Industrial and Commercial Bank of China (ICBC), the Bank of China (BOC) and the
China Construction Bank (CCB), said a senior official with the Central Huijin
Investment Company, a major investment arm of the central government.
To
prepare for the reform and market listing, the government will have to bail out
the bank, which is still plagued by large amounts of non-performing loans, with
a huge injection of funds to rectify its balance sheets.
But regulators
are still considering various plans for the cash injection, and sources of the
financial aid have not been finalized either, China Securities Journal reported
on Wednesday.
The ABC is the only one of the "big four" banks that has
not yet initiated reforms involving a transition to a joint stock company and
market listing.
The bank is believed to have been badly hit by massive
lending to the rural sector, with a huge non-performing loan ratio of 24.75
percent at the end of March.
Under a commitment to the World Trade
Organization in 2001, China must restructure its major banks by the end of this
year, in order to prepare them for the full opening of the country's financial
markets to foreign competitors. (For more biz stories, please visit Industry Updates)
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