(ABC), the only unlisted entity among China’s Big Four state-owned
banks, is to receive $19 billion from the government in a move
designed to aid its market flotation, perhaps in two to three
years.
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Sovereign wealth fund Central Huijin Investment Company will
inject the cash and take a 50 percent stake, with China’s finance
ministry holding the other 50 percent.
Agricultural Bank, the most-troubled of China’s Big Four, was
founded in 1979 to serve the country’s 800 million farmers and is
China’s third-largest lender by assets, with 24,000 branches.
The government is expected to clean up ABC’s balance sheet to
reduce the non-performing loan ratio to around 4.1 percent; at the
end of 2007, it had a non-performing loan ratio of around 23.5
percent of its total advances.
The first of the Big Four to go public was China Construction
Bank in 2005, raising more than $9 billion from its initial public
offering.
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By GlobalDataBank of China, which raised $11.2 billion followed in 2006 while
Industrial and Commercial Bank of China raised $22 billion the same
year.
But slowing growth due to the global credit crunch adversely
affecting Chinese lenders was evident in Bank of China’s third
quarter results, released on 29 October.
It reported net profit for the third quarter of CNY17.6 billion
($2.6 billion), up 11.5 percent from a year ago, compared with the
43 percent increase in profits reported by the bank in the first
half of the year.
