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. Bank of China said on December 10 that it would lend 300 billion yuan as part of Beijing's plan to fund construction of power plants, airports, roads and railways. Before the global downturn, the country's leaders said the restructuring and listing of the remaining two big policy banks were a priority of the government. Development Bank received a US$20 billion rescue in December last year, while Agricultural Bank got US$19 billion last month. The capital injections made the Ministry of Finance and Central Huijin Investment, a subsidiary of the country's US$200 billion sovereign wealth fund, each a 50 per cent shareholder of the two banks. How the equity market looks will also dictate when the deals launch. Offerings collapsed on the mainland this year as the market lost more than 60 per cent of its value because of the growing economic uncertainty. Companies have raised US$14.68 billion from public offerings this year, compared with US$63.32 billion last year, according to Dealogic. In Hong Kong, the figures are US$8 billion compared with US$37 billion. Development Bank has traditionally lent to companies involved in infrastructure projects, while Agricultural Bank is tasked with supporting the mainland's 800 million farmers. As part of the move to list themselves, the banks are making plans to broaden the scope of their lending. Development Bank is considering acquiring city commercial or joint-stock banks in its drive to become a more commercially oriented lender, sources said earlier this year. So far, it has taken only minority stakes in retail banks. Development Bank has a 20 per cent stake in Xinjiang-based Urumqi City Commercial Bank. It also invested 800 million yuan for an undisclosed stake in Langzhou City Commercial Bank in November 2006. Development Bank has also looked overseas and took a 3 per cent stake in Barclays. Agricultural Bank's pre-provision profit had risen 35 per cent in the first nine months to 98 billion yuan from last year, president Xiang Junbo said at the time of the bailout. Net profit at Development Bank totalled 29.6 billion yuan at the end of last year.