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 News reports.
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 following suit.
"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
Technology.
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.
(Xinhua News Agency June 19, 2007)