Bank of China concentrates on restructuring its operations and might not hand out underwriting mandates this year Bank of China might not hand out underwriting mandates for its initial public offering until next year, according to a senior mainland source familiar with the bank's restructuring plan. Although this might not mean a delay of its planned IPO, the bank has been instructed to concentrate on corporate restructuring over the next few months. The development would cast doubt on earlier reports that the bank would go public in its entirety on the domestic stockmarket next year. 'For the moment, where and when the bank will list are not even on the agenda,' the source said. The bank is scheduled to transform from a wholly state-owned entity into a shareholding company by the end of September. Instead of preparing for an IPO, it now appears likely to spend the remainder of the year improving internal controls and looking for strategic shareholders. The bank's listing proposals might not be revisited until next year, the source said. 'Capital market conditions and timing issues will need to be taken into account,' he added. 'It's not something the bank can decide. It will be up to the State Council.' BOC and China Construction Bank (CCB) have been selected as pilots of a plan to reform the Big Four state-owned commercial banks, which control 55 per cent of the country's banking assets. The government is helping the two banks purge their books of non-performing loans and boost their capital adequacy ratios, enabling them to solicit direct investors and list on domestic and global stock markets. It injected US$45 billion from foreign exchange reserves into the two banks at the end of last year, and financed the transfer of their non-performing loans with a face value of 278.7 billion yuan to China Cinda Asset Management last month. The multimillion-dollar mandates to manage public floats for the two banks have been hotly contested among investment bankers. Earlier this year, CCB hired Citigroup, Morgan Stanley and China International Capital Corp to manage its overseas listing. While foreign bankers have been waiting for more clarity on BOC's listing ambitions, Citic Securities and China Galaxy Securities as well as Guotai Junan Securities have been advising BOC on its restructuring since May. The three mainland brokerages are tipped to be frontrunners to lead manage BOC's domestic IPO. BOC International, BOC's Hong Kong-based investment banking arm, is understood to have been retained as an internal adviser to the restructuring. Barred by mainland regulations from underwriting the domestic listing because of its connection to BOC, BOCI is hoping to win a mandate to manage an international offering. In recent months, industry sources have said that initial preparations were geared toward an exclusive domestic listing. However, foreign bankers have continued to lobby for an overseas offering. With CCB and No 5 lender Bank of Communications pursuing domestic listings over the coming year, the government may also prefer BOC to raise funds offshore to reduce the liquidity burden on the A share market, a mainland analyst said yesterday. Goldman Sachs and UBS are widely expected to be the frontrunners to manage a BOC international offering.