A pedestrian walks past a branch of Bank of Communications in Yichang, Central China's Hubei Province February 28, 2007. China's fifth largest lender planned to start the process of a-share listing which is expected to raise over 20 billion yuan next month, a report said Friday. [newsphoto]

Bank of Communications, China's fifth largest lender, planned to start the process of a-share listing which is expected to raise over 20 billion yuan next month, a report said Friday.

The lender expected to release the prospectus for the 40-billion-share offer in early April, Shenzhen Economic Daily cited sources as saying.

Jiang Chaoliang, chairman of the Hong Kong listed bank, said Thursday he hoped the public offering could be finished before July, but the final time hinged on the market conditions and the approval of the regulators, reported the Securities Times.

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The A-share listing will help the bank to get more capital for future business expansion, let the mainland investors share its operation harvest, advance its image on the mainland and solve the problem of untradable shares left over by the share holding reforms, said Jiang.

However, the Shenzhen Economic Daily said, citing sources, the raised capital is likely to be used for the acquisition of small city commercial banks.

On the pricing of the offer, Jiang said there would be a discount to its H-shares. But the final price will depend on the outcomes of the book building and investor roadshows. The bank's H-shares closed at 7.82 HK dollars.

Goldman Sachs Gaohua Securities Co., Galaxy Securities, CITIC Securities and Haitong Securities will underwrite the listing.

Communications bank Thursday reported 12.27 billion yuan in net profits last year, a sharp increase of 32.7 percent from the previous year.

It attributed the rise to its prominent performance in the Yangtze River and Pearl River Delta and the regions neighbouring the Bohai Sea, where 80 percent of the loans were distributed.

The bank saw a 20.8 per cent rise in its total assets to 1.71 trillion yuan, said the bank in a report.

Its international payment transactions climbed 24.7 percent to 11.53 billion yuan, while yields from bond investments reached 1.64 billion yuan.

The Chinese government is encouraging financial companies to sell shares in Shanghai and Shenzhen to boost the quality and size of the nation's stock market. Equity fundraising on the two exchanges in Shanghai and Shenzhen may overtake Hong Kong this year for the first time since 2001, accounting firm Ernst & Young estimates.