Bank of China readying listing, results


The Bank of China's Hong Kong branch is the second-largest bank in the city, one of Asia's finance hubs

By Alex Frew McMillan

HONG KONG, China -- The Bank of China's Hong Kong branch will try to sell stock to the public by the end of July, according to reports.

Local media state that the Hong Kong branch will go public on the Hong Kong stock exchange on July 25.

But details have not been released by the bank. A spokesman for the Hong Kong Stock Exchange said it didn't comment on listing meetings.

If approved for a listing, the bank would have to make a prospectus available to the public before selling stock. But publicizing the sale is up to the bank.

The Hong Kong branch of the Bank of China is holding a board meeting on Tuesday, with details of an initial public offering likely to be discussed then.

Offering at $2 billion

Spokeswoman Clarina Man said she was not aware of the meeting. She said the bank is still working on its plans for an offering.


Chang believes the Bank of China cannot sell stock to the public until it resolves the scandals that came to light this year

The Apple Daily tabloid newspaper reports a first stage of the offering will come July 15, with the public debut on July 25. Investors had anticipated September, at the earliest.

The 25-person listing committee of the Hong Kong Stock Exchange will likely green-light any listing. The stock sale is expected to raise at least $2 billion, one of the highest-profile and most-sought offerings this year.

The Hong Kong stock market was one of the world's worst performers last year, down 23.0 percent. It is down 4.3 percent so far this year.

The Hong Kong branch of the Bank of China is the second-largest bank in the city. It initially considered a joint U.S. and Hong Kong listing but scrapped that because of the paperwork involved.

Details of plans for Tuesday's board meeting emerged in Shanghai, at a KPMG banking conference. Zhu Min, an adviser to the Bank of China's president, gave one of the speeches.

Zhu then flew to Shenzhen, where the Hong Kong branch is holding its meeting, sources state.

Observers question move

The Bank of China is one of China's four state-run banks and its main foreign-exchange and international bank.

But its image has been dented by the dismissal of its former president. Officials allege a separate graft case saw bankers abscond with at least $431 million (full story).

China observers and author Gordon Chang questions whether the bank can go public, without resolving the scandals or what happened to the money (full story).

The Hong Kong branch would be the first Chinese bank to sell stock. It is due to report its results for 2001 after its meeting. Officials have been coy about setting a deadline for the sale.

Skeptics say the problems at the Bank of China reflect the tip of a bad-debt iceberg. By some estimates, China's national debt is more than 150 percent of its total revenues.

In Chang's eyes, the banks are now passing the problem on to the public via taking deposits and selling stock.

Change of accountant

"You can transfer money into the Big Four [banks] but that's not the problem," Chang told CNN recently. "It's not an issue of money. It's the failure of the reform system."

The Bank of China delayed its annual results release from April, while it replaced accountant Arthur Andersen with PricewaterhouseCoopers, which has absorbed Andersen's Hong Kong branch.

The bank still has not set itself a new deadline for its earnings. Man said they are due "next week."

"We have not yet finalized the exact day of the announcement," she said.

China's central bankers have warned that its banks must brace for fiercer competition under the World Trade Organization, which set up a schedule for overseas banks to enter the market.

The Hang Seng index, which would likely include the Bank of China, rose 0.18 percent on Tuesday.

HSBC, the largest stock and the biggest bank in Hong Kong, closed 1.4 percent higher on Tuesday at HK$90.25.