Bank of China gearing up listing efforts
Zhu Min, executive assistant to the president of the bank, denied at a press conference here that the government would offer a second helping hand to "deprive" the BOC of its bad assets, which stood at 351.7 billion yuan (US$42.4 billion) at last year-end.
In 1999, China set up four asset management companies correspondingly to take over and dispose of 1.4 trillion yuan- worth (US$168.7 billion) of bad debts from the Big Four State-owned banks including the BOC.
Instead, Zhu said this year the BOC would use its own capital to write off loans categorized as "losses" totaling appropriately 175 billion yuan (US$21.1 billion) and sell those "doubtful" loans in line with an international loan classification system.
Based on approval from regulators and market analysis, the BOC is projected to issue subordinated debts ranging from 40 billion to 50 billion yuan (US$4.8 billion to US$6 billion) to replenish its capital.
Zhu said the BOC is stepping up regrouping efforts with the next step to introduce a joint-stock system, followed then by an initial public offering (IPO). "So far, we have yet to choose where to list."
In a separate report, the BOC confirmed its NPL ratio shed 7.1 percentage points from a year ago to 16.3 percent and capital adequacy ratio was 6.98 percent at the end of 2003.
Last year, the BOC netted 58.5 billion yuan (US$7 billion) in combined operating profits, representing an annualized rise of 10.3 percent. The BOC was China's 2nd biggest bank with assets totaling 3.84 trillion yuan (US$462.7 billion) at the end of 2003, boasting 11,609 domestic and 549 overseas outlets.
China's Big Four includes the BOC, Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC) and China Construction Bank (CCB). Due to excessive lending to money-losing state-owned enterprises in the past decades, they became debt-laden, analysts say.
China's State Council, or the cabinet, finished pouring a total of 45 billion US dollars + using the country's massive foreign currency reserve -- into the BOC and CCB to help them raise capital in cash at 2003 year-end.
Partly thanks to the "bail-out" package, the BOC has said it hopes to go public sometime in 2005, while industrial insiders widely believe that the listing date for CCB, whose NPL ratio has been the lowest among the Big Four, would be even earlier.
ICBC's IPO is said to be in 2006, while ABC, which has been keeping a low profile, is tipped to be the last to sell shares on the back of its enormous "historical burdens" -- money loaned to rural areas.