City bank sells NPLs, eyes IPO
Shanghai Daily news
Bank of Shanghai is on track to dispose bad loans as it prepares for an
overseas listing and is in preliminary talks with several city commercial banks
for ownership investment, top executives said on Friday.
lender, 8 percent owned by HSBC Holdings Plc, has gained "strong support" from
the banking regulator and the city government for an initial public offering,
said Chairman Fu Jianhua. A plan will be made public soon, he said.
bank is working with state assets management companies to sell down part of its
5.5 billion yuan (US$680 million) nonperforming loan and will finish the work
"in a short time," said Chen Xin, its president.
The lender's bad-loan ratio,
which was 4.88 percent as of June 30, may dip to 4 percent by the end of the
year and to nearly 3 percent next year, said Chen. Its capital adequacy ratio
was 11.28 percent as of September 30, compared with 8 percent required by the
The bank, also 7 percent held by International Finance
Corp, a unit of the World Bank, plans to wait until the right time before
selling shares to ensure its IPO is warmly received. The bank will currently
focus on improving corporate governance and shoring up asset quality, according
"We won't invite domestic investment banks to advise on our stock
sale," said Fu, "It's fine to count on our strategic investors and consultancy
The remark indicated the bank won't seek a listing on Chinese
mainland bourses as domestic regulations require candidates to have homegrown
securities companies as advisers before any equity issuance in Shanghai or
HSBC in August 2004 bought a 19.9 per cent stake in Bank of
Communications for US$1.75 billion. Earlier media reports said the purchase had
raised market concerns about the relationship between HSBC and Bank of
"HSBC told us they won't forget old friends when they've got a new
friend," said Fu. "And they did so by giving us technical aid and other support
as much as possible."
The bank is still pondering whether to attract other
overseas investors, said Chen, noting any possible target should bring in
The bank may invest in other mainland city commercial
banks as stronger players are encouraged to acquire smaller ones to boost
"We are in discussions with several targets," said
Fu, "But we surely won't sacrifice shareholders' interest by making irrational
Bank of Shanghai announced yesterday it became China's first city
commercial lender allowed to open branches outside its home base, preparing to
start operations in nearby Ningbo in Zhejiang Province.