BEIJING -- Bank of Nanjing and Bank of Ningbo are expected to become China's
first two city-level commercial banks to raise funds by going public in order to
compete with larger domestic and overseas rivals, Tuesday's Shanghai Securities
Both banks will issue yuan-denominated A-shares to be listed on the domestic
stock exchanges. Their initial public offering (IPO) applications will be
reviewed by the China Securities Regulatory Commission on Friday.
Bank of Nanjing, partly-owned by BNP Paribas, is expected to sell up to 700
million shares and Bank of Ningbo, which has the Taiwan-based Bank of Overseas
Chinese as one of its shareholders, will sell as many as 450 million shares. The
issued shares will account for 37 percent and 18 percent respectively of the
banks' total shares.
It is not yet known when the banks plan to issue the shares.
Bank of Nanjing, with 58 branches in Jiangsu Province in east China, reported
gross assets worth of 57.9 billion yuan and net profits of 595 million yuan in
2006. Its non-performing loan (NPL) rate was 2.47 percent.
With 68 branches in eastern China's Zhejiang Province, Bank of Ningbo had
56.6 billion yuan in total assets, with a NPL rate of 0.33 percent, as in 2006.
Apart from the two banks, Bank of Beijing has also completed its application
for IPO and city commercial banks in Hangzhou, Chongqing and Shanghai are also
"China's leading city commercial banks, such as Bank of Beijing, Bank of
Shanghai and Bank of Nanjing, are comparable to listed banks in terms of asset
scale and capital quality," said Zhu Yaoming, director of the research center
for small and medium-sized banks with the University of Shanghai for Science and
The average NPL rate of city commercial banks stood at 4.8 percent at the end
of 2006, compared to an average of 7.51 percent for big state banks.
"In the long run, city commercial banks will continue to be faced with
geographical limits on operations," said Zeng Gang, researcher with the
Financial Institute of the Chinese Academy of Social Sciences.
By the end of 2006, total assets of China's 114 city commercial banks had
reached 2.6 trillion yuan, accounting for only six percent of the country's
total banking assets of 44 trillion yuan.
Overseas lenders, such as Citibank and HSBC, began Renminbi retail business
in April. (One U.S. dollar equals to 7.62 yuan)