BOC chief won't rush listing
Hunt for key investor tops tasks that dim chances for early HK sale, chairman says
A Hong Kong stock market listing for Bank of China looked increasingly unlikely this year as it had yet to find a strategic investor or restructure its accounting methods to comply with international standards, chairman Xiao Gang said yesterday.
During the annual general meeting of the bank's Hong Kong subsidiary, Mr Xiao conceded that prospects for an early listing appeared bleak.
'It would be difficult for Bank of China to go public this year, as we are not yet prepared,' he said, adding that two conditions must first be met.
One would be the presence of one or more suitable strategic investors. The bank was still negotiating with lenders from the United States, Europe and Asia, he said.
Mainland regulations allow individual foreign bank to own up to 20 per cent or several banks to hold a combined 25 per cent of a single mainland lender
Mr Xiao said the bank had determined neither the number of strategic investors it would have nor the size of the stake it was likely to sell. 'It takes two to tango. We have to negotiate with the potential candidates,' he said.
Another obstacle to a listing this year was BOC's failure to complete its transition to using international accounting standards.
'We need to cope with these issues before the bank can go public. I do not think it is necessary for us to rush into a listing, as the bank is not short of money,' he said.
Market sources said BOC's listing plans also had been affected by a series of scandals, including one revealed in January at a Heilongjiang sub-branch in which highway firm Northeast Expressway discovered 300 million yuan missing from its account.
Further investigations found that as much as 800 million yuan in client deposits had disappeared, including 180 million yuan from the province's social security fund.
Yesterday, BOC Hong Kong (Holdings) shareholders passed a resolution reducing the number of new shares the bank could issue without separate approval from shareholders to 10 per cent of total issued share capital, against the previous general mandate of 20 per cent.
An exception was provided for share issues related to asset acquisitions, in which case the mandate remains at 20 per cent.
The bank also imposed upon itself a restriction that it would not issue shares at a discount that would result in significant dilution of shareholders' value.
He Guangbei, a vice-chairman and chief executive of BOC Hong Kong, said the moves were aimed at protecting shareholders.
'We are fully aware of investor concerns on possible dilution of shareholder value resulting from the exercise of a general mandate to issue shares,' Mr He said. 'BOC Hong Kong is fully committed to adopting high corporate governance standards.'
The general mandate issue has taken on considerable importance in Hong Kong recently. Shareholders of the Bank of East Asia last month refused to renew the bank's 20 per cent general mandate on fears that management would dilute the value of their holdings.
