Bank of Beijing takes first step in bid to go national

PUBLISHED : Thursday, 10 August, 2006, 12:00am
UPDATED : Thursday, 10 August, 2006, 12:00am

Bank of Beijing said yesterday it would open a branch in the nearby city of Tianjin by the end of the year, making it only the second of the country's 113 city commercial banks to receive approval to expand beyond its home market.

'This is the first step in our expansion to the whole country,' said Yan Xiaoyan, president of Bank of Beijing.

The bank, which is 19.9 per cent owned by Dutch financial services company ING Group and 5 per cent by the International Finance Corp, the private sector unit of the World Bank, plans to launch an initial public offering late next year.

Chairman Yan Bingzhu said the lender was talking with underwriters about a share sale towards the end of next year but declined to say whether it would take place in the mainland, in Hong Kong or elsewhere.

'It's most likely they will list domestically because they are quite small and there are a lot of approval procedures they would have to go through to list abroad,' Moody's banking analyst May Yan said.

Nanjing City Commercial Bank, 19.2 per cent owned by France's BNP Paribas, has already applied for permission to sell shares domestically.

The government is encouraging the country's smaller banks to sell strategic stakes to foreign investors and shares to the public as a way of raising capital, improving corporate governance and bolstering their management skills in the face of mounting foreign competition.

Under China's accession agreement to the World Trade Organisation in 2001, China agreed to give foreign banks unfettered access to domestic retail customers and their 15 trillion yuan worth of savings beginning at the end of this year.

As of June 30, Bank of Beijing had about 120 branches and total assets of 238.5 billion yuan, up from 233 billion at the end of last year, making it slightly bigger than Shenzhen Development Bank, the smallest of China's nationally licensed banks.

The next phase in Bank of Beijing's plans to go national will see it expand into the Yangtze and Pearl River Delta regions, according to chairman Mr Yan. That will require additional regulatory approvals before it can take place, however.

'They are in relatively good shape but expansion will take time and energy,' Ms Yan said.

The bank said its non-performing loan ratio fell to 4.06 per cent at the end of June from 4.22 per cent at the end of last year while its capital adequacy ratio stood at 12.85 per cent at the end of the first half.