appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Christine Chan

State Council endorses the bank's restructuring plan, which allows the listed company to select its best assets

China Construction Bank (CCB), the mainland's third-largest  lender, is one step closer to a stock-market flotation after the State Council approved its pre-listing corporate restructuring, the bank has announced on its website.

As part of the overhaul, China Construction Bank Shareholding will  be set up as a listing vehicle and  will  pick the best assets and staff from the existing institution before going public. Bread-and-butter commercial   operations, including deposits and loans, trade finance, credit cards, and derivatives and equities trading, will  go into the listed firm.

The listed joint-stock company will own the branches and use the trademark of the original CCB.

Non-banking assets would be left with a holding company, China Construction Bank Group, CCB said  on its website yesterday. Analysts presumed that many of  CCB's non-performing assets, even those lying squarely within the banking business, would also be offloaded on the unlisted firm.

'The aim of the revamp is to raise the overall competitiveness of the bank,' a  spokesman was quoted as saying yesterday.

The separation will allow  a listed CCB to report a lower non-performing loan (NPL) ratio and a stronger capital adequacy ratio, which will help enhance the risk resistance and competitiveness of the joint-stock company.

The holding firm  will not be directly involved in the commercial banking business  but will help the  listed company formulate strategic planning decisions.

The split would be completed within 90 days, CCB said.

The restructuring is a prerequisite for taking CCB public, in what could become the first listing by  one of the Big Four state-owned banks. Industry analysts expect the bank to tap up to  US$5 billion next year in a triple listing in New York, Hong Kong and Shanghai.

Beijing has selected CCB and Bank of China (BOC), the mainland's second-largest lender, to pilot state-owned bank stock-market flotations as it tries recapitalise and restructure the debt-ridden sector, which is floundering after decades of reckless lending to unprofitable state-owned enterprises.

In January, CCB and BOC shared US$45 billion  in a government bailout from the foreign-exchange reserves.  Beijing hopes to shore up their sagging capital-adequacy ratios.  China's other two big state banks, the Industrial and Commercial Bank of China and the Agricultural Bank of China, are said to be next in line.

After the bailout, CCB's capital adequacy ratio improved to 14.14 per cent while BOC's hit 16.5 per cent - both comfortably above the international best-practice standard of 8 per cent.  CCB's NPL ratio, at 8.77 per cent, is the lowest among the Big Four.

Meanwhile, a BOC spokesman yesterday said the bank's restructuring proposal would soon be submitted to the State Council.  Last month, BOC chairman Xiao Gang said his bank would be able to complete its pre-listing restructuring by the end of this month.

'Our plan is not a company split,' he said. 'We aim for a listing of the entire bank, including the Hong Kong operations.'The bank is also negotiating with strategic foreign investors as it lays the groundwork for its listing, he said.



CCB closer to  flotation as overhaul  is approved