China's central bank said on Friday the two state-owned
commercial banks chosen late last year for a pilot joint-stock
reform are expected to complete the establishment of the new
companies in September this year.
The People's Bank of China (PBC) said in a statement that the
State Council has set specific reform objectives for the Bank of
China and China Construction Bank, which are reportedly targeting
initial public offerings (IPOs) this or next year.
The goal of the widely-watched reform, which was initiated late
last year with a massive capital injection of US$45 billion into
the two pilot banks, is to build them into competitive modern
commercial banks, the PBC said.
China's four state-owned commercial banks -- the two pilot
banks, the Industrial and Commercial Bank of China and the
Agricultural Bank of China -- hold more than half of the nation's
17 trillion yuan (US$2 trillion) worth of loans.
The two pilot banks, which for years have been managed by
government-appointed officials, are required to establish
shareholders' meetings, boards of directors and supervisory boards,
it said.
"The two pilot banks are working against time to formulate
detailed plans and are trying to complete the institution of the
joint-stock companies by legally required procedures," the PBC
said.
The China Construction Bank, which is said to be targeting its
IPO for as early as this year, will reportedly set up a joint-stock
company to own the assets it plans to list.
The PBC said the two banks will, under the principles of
fairness and openness, choose domestic and foreign strategic
investors that "are strong and have first-class managerial
expertise" to strengthen their capital base and optimize
management.
They are required to come up with core business strategies by
the end of next month, and identify annual targets for the coming
years, it said.
The China Banking
Regulatory Commission (CBRC), the banking watchdog, unveiled
measures last week to ensure the reform of two pilot state-owned
banks proceeds as planned and pledged efforts to prevent
corruption.
The commission has set targets using seven benchmark indicators,
such as the net return on equity (ROE) and capital adequacy ratio,
for the pilot banks to meet before 2007. The criteria were
formulated in accordance with the average level of the world's top
100 banks.
The PBC said it will allow the two pilot banks to issue
subordinated bonds, which the CBRC allowed in a new regulation late
last year to be calculated as non-core capital, to bring their
capital adequacy ratios to above the 8 percent minimum
requirement.
(China Daily March 20, 2004)