Bank of Communications expects its general provision to rise 40 per cent this year to meet a statutory requirement. Chief financial officer Yu Yali, during an online presentation yesterday of the bank's A-share listing, said that its general provision would rise to 6.208 billion yuan this year from 4.428 billion last year. 'Our general provision will meet the statutory requirement if the resolution is approved by shareholders and implemented,' she said. The general reserve can be treated as core capital, she said without disclosing the minimum required level. Bocom's capital adequacy ratio stood at 10.83 per cent last year, more than the 8 per cent minimum requirement. Its core or tier-one capital stood at 8.52 per cent. An analyst at a European bank said the move was expected, as under Ministry of Finance rules and Chinese accounting standards, financial institutions had to meet a certain level of general reserve by next year. He said it would not affect Bocom's earnings as the provision was made after tax and would be treated as a balance sheet item rather than a profit and loss account item. 'However, the retained fund will not be available for distribution to shareholders, so it might affect Bocom's dividend payout,' he said. Ms Yu said the dividend payout ratio was 38.5 per cent in 2005 and 36.2 per cent last year but she did not say whether Bocom would maintain a similar ratio after the listing. Bocom launched its A-share sale today, offering 3.19 billion new shares at seven yuan to 7.90 yuan each, raising up to 25.2 billion yuan. HSBC's 19.9 per cent stake will be diluted to 18.6 per cent as foreign investors are not allowed to buy A shares directly. Dicky Ip, Bocom executive vice-president, said the lender supported HSBC's retention of its stake and the two banks were in talks with regulators on an anti-dilution plan. Market watchers said Bocom trimmed the number of shares for sale as it hoped to make it easier for HSBC to restore the level of its stake. As a strategic investor, HSBC has the right to raise its stake to 40 per cent. Chairman Jiang Chaoliang said the bank's compound annual profit growth rate before provision was 36.1 per cent over the past three years. He said Bocom would speed up development of electronic banking but would not expand on a large scale. Bocom had 2,627 outlets in 143 cities at the end of last year.