Chongqing Rural Commercial Bank started bookbuilding for its Hong Kong initial public offering as it tries to keep a step in front of its domestic rivals in capital-raising amid a push by Beijing to boost rural banking. The bank, based in the southwestern city of Chongqing, will be the first publicly traded rural mainland lender and looks likely to net as much as US$1.55 billion before it lists on the Hong Kong exchange. According to a term sheet sent to investors, Chongqing Rural plans to float two billion shares at HK$4.5 to HK$6 each. It could raise up to US$1.78 billion by selling 2.3 billion shares if the overallotment option is exercised. Its shares are expected to debut on the Hong Kong exchange on December 16. The offering is more than one year behind schedule, with the bank originally hoping to list shares in the second half of last year. The timing of the initial public offering reflects Chongqing's enthusiasm to get the rural lender listed despite several companies shelving their Hong Kong listing plans owing to the recent market downturn. 'The sooner the bank raises funds from the stock market, the more beneficial for its future growth since dozens of mainland lenders are queuing up for an IPO either on the domestic or overseas exchanges,' said Haitong Securities analyst She Minhua. 'A-share listings by local lenders also help Chongqing build its image as a financial centre in western China,' She said. Analysts said mainland city-level commercial banks have shown increasing interest in share sales as they scramble for growth capital. Chongqing Rural will become the ninth mainland bank listed in Hong Kong, joining their bigger domestic peers. The third-largest lender to agricultural businesses in China was among the top beneficiaries of Beijing's efforts to bolster rural banking. Chongqing Rural evolved from rural co-operatives after they were merged by the government to form the provincial-level lender. The government also helped it with five billion yuan (HK$5.81 billion) of non-performing loans during the restructurings. The bank now has assets of more than 200 billion yuan and 1,800 outlets with 14,000 employees. Chongqing government's investment arm Chongqing Yufu Assets Management and other state-owned firms are its major shareholders. 'Rural co-operatives used to be among the worst-performing assets in the country's finance sector,' said He Fuqiang, a director at Beijing ZHY Money & Bond Market Investment Consulting Centre. 'Thanks to the support by the government, they are now looking to expand but the outlook remains unclear because their asset qualities are not solid enough.' Analysts are wary of Chongqing Rural's limited brand awareness among overseas investors. Taiwan-based Fubon Financial Holding said its life insurance unit would participate in the bank's offering though it did not disclose the investment size. Mainland media reported that the rural lender would have three to four overseas institutions including Nexus Capital and Fubon as cornerstone investors for its Hong Kong IPO. According to Caixin magazine's website, the bank's capital adequacy ratio stood at 8.1 per cent at the end of 2008 and the share sale could boost the ratio to about 14 per cent. Caixin reported its bad-loan ratio was 2.99 per cent in the first half of this year. The bank's Hong Kong offering will be the city's fifth-largest this year if the shares are priced at the top of the range.