Bank of China (BOC)
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BOC shifts attention to 20b yuan share offer

June issue in Shanghai the focus after the world's largest listing for six years

Bank of China, the country's second-largest lender, may list its shares on the Shanghai stock exchange as soon as next month, a senior official at the China Securities Regulatory Commission (CSRC) said.

The CSRC official yesterday said a June listing in Shanghai was 'very possible but not definite'. Bank officials declined to comment.

Brokers said Bank of China would raise about 20 billion yuan from the domestic share sale at about five yuan a share and the deal would account for about 3 per cent of its enlarged share capital.

The A-share listing would achieve several objectives at the same time - give domestic investors a piece of the world's hottest listing of the year, help boost a market that is nervous over a potential flood of new listings and raise capital for the bank, brokers said.

Last week, China CAMC Engineering said it would float 60 million shares on the small and medium-size enterprises board on the Shenzhen stock exchange on June 5. Trading would start on June 19.

CAMC's proposed deal will be the first initial public offering since the CSRC imposed a ban last May before the 1,400 listed companies began preparing to make their state shares tradable. Bank of China will be the first new offering on the main board in Shanghai.

Peng Yunliang, a senior analyst at Shanghai Securities, said the regulator wanted to use a small firm to test the market. 'If the reaction is good, it will choose a big cap. The Bank of China fits this category. Bank stocks have done well and retail and institutional investors want to buy them,' Mr Peng said.

'For the A market, 20 billion yuan is a substantial [sale]. My estimate is that they will price it about five yuan, above the $2.95 in Hong Kong and above that of China Minsheng but they must also consider its price relative to that in Hong Kong.'

Bank of China raised US$9.7 billion in Hong Kong last week, the world's biggest offering in six years with subscriptions from one million retail investors. The shares will debut on Thursday.

The bank can list A shares because it submitted an application to the CSRC in 2004, meaning that it has completed the necessary two-year preparation period and because the approvals it obtained for the Hong Kong listing clear it for a Shanghai listing.

However, people close to Bank of China's Hong Kong offering said it was too early to talk about the bank's A-share listing. 'We had no indication as to timing yet,' one source said, adding that it would depend on market conditions.

One outstanding issue is the controlling stake in the bank owned by Central Huijin Co, the investment arm of the central bank. It is not clear if or when these will become H shares or A shares.

Other key Hong Kong-listed corporates that want to list A shares include PetroChina, Aluminum Corp of China and Air China.

The Hong Kong stock exchange last night said that from Friday, short selling would be allowed in Bank of China shares.

Back to market

Regulator says a BOC listing in Shanghai in June possible

Domestic investors will get a piece of hottest offering

Early application in 2004 clears path for Shanghai offering