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China banks poised to go on sale
(AP)
Updated: 2005-10-20 07:15
China's giant, state-owned banks — notorious for huge portfolios of bad debt,
weak management and antiquated service — are poised to raise billions of dollars
in international stock offerings ... and investors are keen to buy.
A woman walks past
a branch of China Construction Bank in Shanghai in this photo taken on
April 3, 2005. [newsphoto] | The "Great Chinese
Bank Sale," as one economist called it, began this month with the China
Construction Bank's launch of what promises to be the world's biggest initial
public offering for 2005, raising $8 billion.
The largest Chinese IPO before this was a $5.7 billion offering in 2000 by
China Unicom Ltd., a telecommunications company.
The Construction Bank, known as CCB, is China's biggest property lender and
third-biggest bank by assets. It plans to sell 26.5 billion shares, or about 12
percent of its capital. Sales to retail investors were to end Wednesday, with
trading on the Hong Kong Stock Exchange to start Oct. 27.
The Construction Bank is the first of China's "Big Four" state commercial
banks to test international investors' sentiment by offering shares of the
parent company. An earlier IPO by the Bank of China, the second biggest bank,
involved only its Hong Kong unit.
So far the response has been positive: A slew of Hong Kong tycoons announced
their support and the offering for institutional investors was fully subscribed,
prompting the bank to raise its IPO price range to 1.90-2.40 Hong Kong dollars
(24-30 U.S. cents).
Though the final outcome will depend on how the bank's shares do after
listing, retail investors appeared eager to buy, with some lining up in the
streets outside brokerage offices in Hong Kong.
Apparently encouraged by CCB's experience and that of Shanghai-based Bank of
Communications, a smaller lender whose shares are still trading at about 15
percent above their June launch, Bank of China reportedly is moving ahead with
plans to sell shares overseas next March or April.
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