Banking News
- ABC expecting 1st half cash injection to prepare IPO
Date: 1-Feb-2007 Sources: (Xinhua Online)
The Agricultural Bank of China (ABC), the last of the nation's four leading commercial banks to go public, will have its capital increased by Central Huijin Investment Co. in the first half of this year as it moves towards a public listing.
Bank sources said Wednesday that Central Huijin will determine how much money to pump into the bank following an audit by experts from the National Audit Office. The audit result will probably be released in the first half of the year.
Founded in 2003, Central Huijin Investment is an investment company owned by the People's Bank of China, the central bank, which holds shares in the four leading commercial banks.
In 2005, Central Huijin injected 60 billion U.S. dollars into three of the 'big four', namely the Industrial and Commercial Bank of China, China Construction Bank and Bank of China. The money came from the nation's huge foreign exchange reserves.
The bank sources said ABC's scheme for the joint-stock reform and IPO (initial public offering) has been hammered out. But the result of a pre-IPO audit is needed to make decisions on a capital injection and the selection of strategic investors. The audit will provide reliable financial data on which Central Huijin's cash injection can be based, the sources added.
Central Huijin will make a bigger investment in ABC than in the other three big commercial banks, an official with the company revealed on condition of anonymity.
Preparing ABC for listing -- improving the capital adequacy ratio and the balance sheet, and writing off non-performing loans -- will require an injection of about 900 billion yuan (115 billion U.S. dollars).
The company official estimated that Central Huijin would contribute about 25 to 30 billion U.S. dollars.
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