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Christine Chan

The bank plans strategic stake sales ahead of its planned IPO

Bank of China (BOC),  the mainland's biggest foreign-exchange bank,  is set to cut a deal with foreign investors on strategic equity stakes  ahead of its proposed listing next year, according to the bank's chief Xiao Gang.

'We are confident that the listing could happen next year,' Mr Xiao said in Hong Kong yesterday.

Mr Xiao was speaking after the annual general meeting of BOC's Hong Kong-listed flagship, BOC Hong Kong (Holdings).

Asked about  the bank's  overseas listing option, he said: 'We are confident', without elaborating.

The bank appears to be a step closer to becoming China's first state-owned bank to list, with   its pre-listing restructuring - a pre-requisite  before going public -  due for completion by the end of next month.

'Following the restructuring, the next step forward is to bring in strategic foreign investors,' Mr Xiao said.

He said negotiations  were heating up, but he declined to name the foreign investors.

BOC  and China Construction Bank (CCB)  are  racing to  list after equally sharing a US$45 billion  bailout from the government's foreign-exchange reserves in January.

CCB was  expected to list as early as this year. However, it is believed its listing has been delayed to next year after  officials  expressed  doubts over  the bank's readiness to transform  a decades-old operating structure to ensure it would run according to market forces.

Mr Xiao said a string of new measures would also come into place to ensure the bank  met the requirements expected of a listed bank.

While BOC has yet to hold a so-called 'beauty pageant' for investment banks, industry sources expect  the winners  will be Goldman Sachs, UBS and BOC's wholly-owned investment banking subsidiary BOC International because of their success in taking BOC Hong Kong public in 2002.

Meanwhile, the chairman of Shanghai-based Bank of Communications,  Yin Jieyan,   was yesterday quoted by Bloomberg as saying   China's fifth-largest lender was trying its  'best to do the IPO this year'.

Mr Yin said  talks with overseas banks about buying a stake in the lender before its share sale would be finished this year. The bank is reportedly in talks with HSBC Holdings and Standard Chartered.

Standard Chartered director Peter Wong Tung-shun  said the bank had been in talks with a number of mainland banks, but would not comment  on any  purchase.

'I don't think there's anything out of the ordinary about this [talks with mainland banks],' Mr Wong said.  'I can't tell you at this stage how far our talks have gone.'

On Tuesday, Standard Chartered's China chairman Lance Browne  said the bank hoped to reach an agreement to buy a stake in a mainland bank by the end of this year.

An HSBC spokeswoman said the bank would not comment on market rumours.



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