Money

Agricultural Bank set for date with bourses

By Wang Bo and Mao Lijun (China Daily)
Updated: 2010-05-05 09:11

Agricultural Bank set for date with bourses

A worker unloads boxes outside an Agricultural Bank of China branch in Shanghai. [Kevin Lee/Bloomberg News]

BEIJING - Agricultural Bank of China (ABC) has started to speed up its listing process by seeking approval from the bourses for its initial public offering (IPO), sources close to the matter said on Tuesday.

Agricultural Bank, the country's only big lender yet to be listed, wants its IPO to hit the bourses ahead of its peers, who are also planning to raise funds, said the sources.

The lender is planning a simultaneous share float in Shanghai and Hong Kong in July, widely expected to be the biggest IPO in recent times.

The float could even eclipse the $21.9 billion raised by Industrial and Commercial Bank of China in 2006, said the sources.

"The bank has submitted an initial IPO application to the Hong Kong Stock Exchange," the source said, but said that the plan is still not final as more details needs to be incorporated.

The State-run lender plans to issue about 50 billion new shares through the dual listing with an issue price of around 3 yuan per share, the source said. That will put the total value of the lender's IPO at some $22 billion, compared with earlier estimates of nearly $30 billion.

"The actual price band of the issue will be fixed two weeks before the float," the source said.

A spokeswoman for the bank declined to comment on the issue, while Bloomberg reported on Tuesday that the lender was planning to divest 12 to 18 percent of its equity through the IPO.

Sources indicated that the bank was racing against time to float its shares as early as possible, considering that the government is contemplating more tightening measures and other major lenders are also jumping on to the fund raising bandwagon.

The bank expects to complete its public float before the other major lenders hit the market, a source close to the bank said.

"It has felt the pressure and is stepping up the preparatory work, as most other lenders have also set the ball rolling for their fundraising activities," the source said.

China Construction Bank, the nation's second largest lender, said last week that it was planning to raise $11 billion through a rights issue, while Industrial and Commercial Bank of China is set to mop up funds to the tune of $12 billion.

Meanwhile bank shares continued to decline on the bourses on concerns over the massive new share supplies and government measures to tighten mortgage lending.

Central Huijin, the State-owned parent of the big three lenders, said last Friday that it would participate in the banks' fund raising plans this year.

The government on Sunday asked banks to raise the proportion of deposits that they must set aside as reserves to 17 percent in a clear signal to curb lending and mop up excessive liquidity in the market.

Analysts said the possibilities of interest rate hikes later this year and the tighter reserve ratio requirements may cloud sentiment on the capital markets as it may squeeze liquidity.