ABC to shift rural branches

(Agencies/China Daily)
Updated: 2007-10-12 10:59

The Agricultural Bank of China (ABC), saddled with $100 billion of bad loans, may move some of its 14,500 rural branches to independent companies to speed up a government bailout and sell shares for the first time.

A worker cleans the sign of an Agriculture Bank of China in Shanghai. The bank, saddled with $100 billion of bad loans, may move some of its 14,500 rural branches to independent companies to speed up a government bailout and sell shares for the first time. [China Daily] 

The nation's fourth-largest bank, established in 1979, plans to reduce its ownership in unprofitable offices to trim delinquent debt, according to a draft of a government proposal.

China has spent about $500 billion bailing out its biggest lenders over the past decade. The three largest - the Industrial and Commercial Bank of China, Bank of China, and China Construction Bank - raised a combined $53 billion selling shares in the past two years.

The Agricultural Bank of China's cleanup has been delayed because 23 percent of its loans aren't getting paid, according to its latest annual report.

"It (moving branches) allows the restructuring to proceed quickly to the next stage," said Liao Qiang, a Beijing-based analyst at Standard & Poor's. "There're still uncertainties about any responsibility to aid subsidiaries suffering difficulties."

The Ministry of Finance and China Investment Co, an agency set up last month to manage $200 billion of the nation's foreign exchange reserves, would each own a third of the Agricultural Bank of China, the document said.

Another 20 percent would be sold to foreign investors with experience in rural lending, and about 5 percent to local corporate investors, according to the document. The rest would be offered to the public.

The 15-page draft proposal, which is being reviewed by the State Council, didn't say who will take stakes in the new companies that own the branches. The Agricultural Bank of China spokesman Liu Hengbao said he is unaware of the document. Lou Xiaohui, an official from the finance ministry, declined to comment.


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