New | China postal bank's US$25b IPO: investor's dream or government jackpot?
PSBC in talks over sale of US$6b stake ahead of IPO next year, though opinion divided over whether funds will help the bank or government
Can a Chinese policy lender really go public - and would investors jump at the chance of buying into an old-fashioned savings bank whose bread and butter is rural micro-lending? The answer, it seems, is yes.
Postal Savings Bank of China (PSBC) is in talks over the sale of a 15 per cent stake to strategic investors for US$6 billion this year before launching an initial public offering next year worth up to US$25 billion, according to state-run China Daily.
The selloff could be a quick ticket for investors into the virtually untapped hinterland of mainland consumption, where many of the bank's 40,000 branches collect deposits and process money transfers. But buying into the bank, which answers directly to the central government, could also be a bureaucratic nightmare and technological time bomb, experts warn.
One thing is certain: PSBC is a market leader in an environment where few formal financial institutions have dared to tread - China's largely poor countryside.
Its savings-branch network reaches into the smallest towns and even villages, helping it to build one of the mainland's strongest deposit franchises with 800 billion yuan (HK$989.7 billion) in savings and assets worth 5.6 trillion yuan at the end of 2013.
As a policy bank, the government has directed it towards offering the simplest banking products to the widest possible base, including small rural businesses. That has pushed its network beyond even that of Hong Kong-listed Agricultural Bank of China.
The reach into a growing yet unexplored market should attract the attention of players in China's e-commerce and internet industries, which continue to make inroads into rural communities in the hope of finding new markets for online goods.