Lender still looking at strategic investors and trying to get regulatory approvals China Citic Bank, the mainland's seventh-largest lender by total assets, has delayed its planned HK$2 billion initial public offering until the first half of next year, people familiar with the situation said. 'They are still completing the [Citic International Financial Holding] acquisition, looking at strategic investors and working on regulatory approvals,' one source said. The Hong Kong offering had been expected before the end of this year. GE Capital, Grupo Santander, BNP Paribas, Barclay's and Banco Bilbao Vizcaya Argentaria are among the investors vying to purchase a 5 per cent to 10 per cent strategic stake in Citic Bank, one of the last countrywide commercial lenders without a foreign partner. Overseas banks including Citigroup, HSBC, Royal Bank of Scotland, Deutsche Bank, UBS and Bank of America have invested a combined US$22.5 billion in more than a dozen mainland banks since the beginning of last year. Foreign banks are eager to gain direct exposure to China's banking industry, where 33 trillion yuan sat in corporate and retail deposits at the end of June. Mainland banks usually seek out strategic investors before they conduct an offer to give confidence to international investors. Financial institutions in the same class as Citic Bank have sold strategic stakes for 1.5 to 1.8 times book value. At 1.5 times book value, a 5 per cent to 10 per cent stake in the bank would be worth 1.72 billion yuan to 3.44 billion yuan. The bank's net asset value was 23 billion yuan at the end of last year. Both Citic Bank and Citic International Financial are owned by Citic Group, China's largest investment firm. The parent company injected five billion yuan into the bank earlier this year. Citic International Financial, which operates banking, asset management and investment banking businesses in Hong Kong, has already agreed to pay HK$5.2 billion, or 1.15 times net asset value, for a 16 per cent stake in the bank. Citigroup, Lehman Brothers and HSBC Holdings are arranging Citic Bank's offer. JP Morgan is the bank's financial adviser for the offering. Citic Bank said it earned 3.7 billion yuan in operating profit in the first half of this year, although it gave no comparative figure for the first half of last year. For 2005 as a whole, its operating profit was 6.3 billion yuan. It has said it expects to increase its operating profit by 17.5 per cent this year. In the first half, deposits rose 11 per cent to 580 billion yuan while outstanding loans rose 9 per cent to 671 billion yuan. Non-performing loans stood at 2.5 per cent against the national average of 8 per cent. Citic Bank's capital adequacy ratio, a measure of a lender's ability to cover its outstanding loans, rose to 9.4 per cent from slightly above the 8 per cent required by mainland regulators. Total assets rose to 671 billion yuan.