Bank of China listing gets green light


The Bank of China graces the cover of a popular guide to Hong Kong and is now preparing to sell stock to the public

HONG KONG, China (CNN) -- The Bank of China has won approval for its stock offering, according to stock-market sources.

The bank is the largest foreign-exchange institution and one of China's "Big Four" national banks. It is expected to raise between $2 billion and $3 billion with an inital public offering of stock this year.

The bank has also now won approval from the listing committee of the Hong Kong stock exchange, according to market sources.

The bank has set no deadline for a stock sale. But it is expected to go public on July 25, now officials have met in Shenzhen, China.

The Beijing-based bank would be the first of China's big banks to float a subsidiary to the public. It is the second-largest bank in Hong Kong, after HSBC.

But the Bank of China has yet to release its profit and loss figures for 2001. It changed auditors, switching from Arthur Andersen to PricewaterhouseCoopers. PWC has taken over the operations of Arthur Andersen in greater China.

More information needed before sale

The stock exchange green-lighted the sale, as expected. But the stock market committee is requiring more data for the public, before the public buys stock.

"The listing committee wants to see Bank of China give more information to investors, such as its its risk management system as well as other risk factors," one committee source told the South China Morning Post.

The criteria are particularly high because of the large amount of interest from individual investors in Hong Kong.

"Bank of China is a well-known brand name in Hong Kong and it is expected that many retail investors will be interested in it," the source stated.

The bank is reportedly mulling a proposal to give bonus stock to investors who hold the listing for more than one year.

Volatility in the Hong Kong market is relatively high, with investors often choosing to sell stock they have bought within a matter of weeks to lock in short-term gains.

The Bank of China filed a plan with the stock-exchange outlining its offering. That document did not outline a plan to sell stock to institutions.

But corporate interest is expected to be high. If the bank does attempt to sell stock to companies, it will have to inform the public before the initial public offering, the listing committee reinforced.

China's banks are preparing for harsh competition from overseas banks, now the country has outlined their entry under World Trade Organization rules.

The Bank of China is typically cited as the best-run of China's large banks. But investors will scrutinize its figures for signs of bad loans, after a series of scandals broke this year involving branches both overseas and in China. (Full story)

According to writer Gordon Chang, who penned "The Coming Collapse of China," the bank cannot go public without resolving those scandals. (Full story)