Harbin Bank may be eyeing listing

Harbin Bank has joined a clutch of city commercial lenders on the mainland to make plans for a stock market listing that is likely to raise 10 billion yuan (HK$12.25 billion) via a dual Hong Kong-Shanghai initial public offering.

The bank, based in Harbin, capital of Heilongjiang province that borders Russia, has kicked off its IPO plan by appointing managers for the deal, which include China International Capital and China Merchants Securities, two people with knowledge of the fund-raising plans say.

Harbin Bank is the latest among nearly 30 city commercial banks to chase a share offering after the securities regulator suspended A-share IPOs by them in 2007.

The size of the fund-raising could amount to about 10 billion yuan, but no clear-cut time frame has been set yet. The bank hoped to complete the exercise next year, one source said.

Calls to the bank yesterday went unanswered. Harbin Bank has 13 outlets and 24 rural lenders. Net profit was 1.7 billion yuan last year.

Analysts said it was among the few quality city commercial banks and was hungry for fresh funds to fuel expansion. The China Securities Regulatory Commission (CSRC) approved Bank of Beijing, Bank of Nanjing and Bank of Ningbo to launch IPOs on the A-share market in 2007 before suspending approvals for a fourth city bank, though financing demand from small banks has increased greatly in the past five years.

The regulator held back further listings because of concerns about the asset quality of city commercial banks. Most of the mainland's 140 city commercial banks evolved from city co-operatives, which were once allowed to serve clients only in their own regions. In 2006, the banking regulator allowed some of them to expand across the nation.

'Many of the banks are still struggling to meet the upcoming tougher capital requirements and scrambling to raise additional funds,' said He Fuqiang, a director at Beijing ZHY Money & Bond Market Investment Consulting Centre. 'It is not easy for Harbin Bank to secure an early approval for the A-share portion of the IPO.'

Beijing will raise the minimum capital adequacy ratio (CAR) to 10.5 per cent, from the current 8 per cent for city commercial banks, from January 1, 2013. Harbin Bank's CAR stood at 13 per cent at the end of last year, much higher than the pending tougher capital requirement.

Earlier this year, the CSRC said 14 city and rural commercial banks had applied for listings. Analysts had said more than 10 of their peers were also planning to raise funds on stock markets at home and overseas.

Bank of Shanghai, the mainland's second-largest city commercial lender, is now preparing an IPO in Hong Kong after waiting five years for a CSRC approval for a domestic listing.

A source close to the CSRC said Guiyang Commercial Bank was the front runner among its peers to win an A-share IPO approval.