CCB closer to flotation as overhaul is approved
State Council endorses the bank's restructuring plan, which allows the listed company to select its best assets
China Construction Bank (CCB), the mainland's third-largest lender, is one step closer to a stock-market flotation after the State Council approved its pre-listing corporate restructuring, the bank has announced on its website.
As part of the overhaul, China Construction Bank Shareholding will be set up as a listing vehicle and will pick the best assets and staff from the existing institution before going public. Bread-and-butter commercial operations, including deposits and loans, trade finance, credit cards, and derivatives and equities trading, will go into the listed firm.
The listed joint-stock company will own the branches and use the trademark of the original CCB.
Non-banking assets would be left with a holding company, China Construction Bank Group, CCB said on its website yesterday. Analysts presumed that many of CCB's non-performing assets, even those lying squarely within the banking business, would also be offloaded on the unlisted firm.
'The aim of the revamp is to raise the overall competitiveness of the bank,' a spokesman was quoted as saying yesterday.
The separation will allow a listed CCB to report a lower non-performing loan (NPL) ratio and a stronger capital adequacy ratio, which will help enhance the risk resistance and competitiveness of the joint-stock company.
The holding firm will not be directly involved in the commercial banking business but will help the listed company formulate strategic planning decisions.
The split would be completed within 90 days, CCB said.
The restructuring is a prerequisite for taking CCB public, in what could become the first listing by one of the Big Four state-owned banks. Industry analysts expect the bank to tap up to US$5 billion next year in a triple listing in New York, Hong Kong and Shanghai.
Beijing has selected CCB and Bank of China (BOC), the mainland's second-largest lender, to pilot state-owned bank stock-market flotations as it tries recapitalise and restructure the debt-ridden sector, which is floundering after decades of reckless lending to unprofitable state-owned enterprises.
In January, CCB and BOC shared US$45 billion in a government bailout from the foreign-exchange reserves. Beijing hopes to shore up their sagging capital-adequacy ratios. China's other two big state banks, the Industrial and Commercial Bank of China and the Agricultural Bank of China, are said to be next in line.
After the bailout, CCB's capital adequacy ratio improved to 14.14 per cent while BOC's hit 16.5 per cent - both comfortably above the international best-practice standard of 8 per cent. CCB's NPL ratio, at 8.77 per cent, is the lowest among the Big Four.
Meanwhile, a BOC spokesman yesterday said the bank's restructuring proposal would soon be submitted to the State Council. Last month, BOC chairman Xiao Gang said his bank would be able to complete its pre-listing restructuring by the end of this month.
'Our plan is not a company split,' he said. 'We aim for a listing of the entire bank, including the Hong Kong operations.'The bank is also negotiating with strategic foreign investors as it lays the groundwork for its listing, he said.
