Focus now is contributing to Beijing's stimulus plan
The initial public offerings of China Development Bank and Agricultural Bank of China are expected to be pushed back while the banks increase lending as part of Beijing's 4 trillion yuan (HK$4.53 trillion) stimulus plan to boost the economy.
'Delays are very likely. The priority is social stability now, not any one institution's equity offering,' said a source.
Development Bank had been planning for a listing as early as the third quarter of next year, but that is likely to be pushed back to the following year. Agricultural Bank has said it wanted to sell shares in 2010.
The new lending will increase the number of non-performing loans, which will take more time to clean up.
'They are being pushed to do something that doesn't make economic sense but makes political sense, and there is real concern over the asset quality of the loans. They will not be market-oriented but policy-oriented,' another source said.
The State Council announced early last month the massive two-year spending plan, focused on construction and infrastructure, as the country's export-dependent economy shows signs of slowing as key trade partners enter recession.
