Construction Bank to issue 10 billion yuan bonds ahead of listing

China Construction Bank plans (CCB) will soon issue up to 10 billion yuan (1.2 billion US dollars) in subordinated debts in preparation for a market listing, a bank spokesman announced Wednesday.

This will be the third installment of the bonds from the bank this year, and will be up for sale on Dec. 21 and 22.

The offering is made up of fixed rate bonds and floating rate debt scheduled for institutional investors through China's inter-bank market.

The banks spokesman said CCB may raise no more than 6.7 billion yuan (811.1 million US dollars) through bond sales on top of the targeted 10 billion yuan.

Partly thanks to the first two rounds of bonds issued last July and September, CCB increased its capital adequacy ratio, a measure of its available capital in proportion to its outstanding loans, to 9.39 percent by the end of September.

This is above the 8-percent minimum level set under the Basel Accord for commercial banks, which has been accepted in principle by China's banking regulators.

CCB and the Bank of China are leading the government's latest, aggressive program to reform the banking system, which was launched at the end of last year.

The two best performers of China's Big Four state banks -- also including the Industrial and Commercial Bank of China and Agricultural Bank of China -- each received 22.5 billion dollars from the central government in a bid to boost their capital bases.

They are currently talking with potential investors and are likely to go public either in China, overseas, or both, next year, said the banks' presidents.

Under its commitment to the WTO, China will grant unrestricted market access to foreign banks by 2006. Central authorities hope the listings will make domestic banks more sophisticated and market-oriented.

CCB, which has already split into a holding company and a joint-stock company -- with the latter including all its core operations -- had a non-performing loan ratio of 3.74 percent at the end of September, the lowest among the Big Four.

The bank saw its operating profits rise 21.5 percent year-on-year to 49.94 billion yuan (6 billion dollars) in the first nine months of the year.

Source: Xinhua