China Construction Bank (CCB) has issued 16.7 billion yuan (US$2 billion) in bonds to brace for its market listing, a bank spokesman said Wednesday.

The bank issued 10.62 billion yuan (about US$1.3 billion) in ten-year fixed rate bonds and 6.08 billion yuan (US$734 million) in ten-year floating rate debt that were sold recently to institutional investors through China's inter-bank market.

This is the third installment of the bonds from the bank this year. Thanks in part to the first two rounds of bonds issued last July and September, CCB raised its capital adequacy ratio, a measure of its available capital in proportion to its outstanding loans, to 9.39 percent by the end of September.

This is above the 8-percent minimum level set under the Basel Accord for commercial banks, which has been accepted in principle by China's banking regulators.

CCB and the Bank of China are leading the government's latest, aggressive program to reform the banking system, which was launched at the end of last year.

The two best performers of China's Big Four state banks -- also including the Industrial and Commercial Bank of China and Agricultural Bank of China -- each received US$22.5 billion from the central government in a bid to boost their capital bases.

They are currently talking with potential foreign investors, who will bring the Chinese banks more sophisticated and market-oriented management. The banks are likely to go public either in China, overseas, or both, next year, said the banks' presidents.

China is overhauling its banks to vie with foreign competition, because the country, in accordance to its commitment to the WTO, will grant unrestricted market access to overseas banks by 2006.

CCB, which has already split into a holding company and a joint-stock company -- with the latter including all its core operations-- had a non-performing loan ratio of 3.74 percent at the end of September, the lowest among the Big Four.

The joint-stock firm, called the China Construction Bank Corporation, has set up a board of directors, a share-holders' meeting, a board of supervisors and senior management to start real corporate governance and help cut off government-ordered lending.

The bank saw its operating profits increase 21.5 percent year-on-year to 49.94 billion yuan (US$6 billion) in the first nine months of the year.

(Xinhua News Agency December 30, 2004)