Bank of China plans to go public at home


With its subsidiary's stock trading down 5 percent in Hong Kong, the Beijing bank says it is planning a mainland listing

HONG KONG, China -- With its Hong Kong subsidiary barely public, Beijing-based Bank of China says it plans to go public in mainland China within three years.

Chairman and President Liu Mingkang told The Wall Street Journal that it his personal goal for the parent bank to take its overseas and domestic arms to market in China.

The stock sale would be an A list offering, sometime in the next 36 months, he said.

Liu has also promised to crack down on corruption and graft within the bank, telling the Journal that "the story I delivered to the public in China and outside of China is a story of 'never again.'"

Rocked by scandals

The bank was rocked earlier this year by a $20 million fine over irregularities at its New York branch and an alleged embezzlement scheme at its Kaiping branch that has left millions missing.

Some observers say such incidents would cloud any stock sale, including that of its Hong Kong subsidiary. (Full story)

"Since I took the chairmanship of the Bank of China, nothing like the Kaiping and the New York branch, judged by the nature and the size, will be coming again," he was quoted as saying in the Journal.

Many bank analysts say little is known about bad-debt problems within China's bank system.

The bank's offering would include the 75 percent share it still owns in its Hong Kong arm. The Hong Kong branch started trading on Thursday, with a lackluster start.

Still down 5 percent

Hong Kong's second-largest bank last traded at HK$8.05 on Thursday, though its closing price -- an average of the last five trades -- settled at HK$8.10.

The bank closed at HK$8.30 on Friday, a rise for the day but still a 2.4 percent drop from the price institutions paid. (Full story)

Shares hit the HK$8.00 mark but stayed above it to support from investment bankers. Friday's showing was relatively strong on a day Asian markets took a chip-stock drubbing.

Liu told the newspaper the first day's trade was "small potatoes" because the IPO is "a story of change, a story of good corporate governance, a story of growth."

The bank is often cited as China's best-managed financial institution. It is China banking's main representative overseas, and its chief foreign-exchange arm.

It is expected to lead the way for all of China's "Big Four" banks to take themselves public, as they prepare to face competition from international banks on home turf.