Bank of China (BOC), one of the country's Big Four state banks, has issued subordinated debts totaling 27 billion yuan (about 3.3 billion US dollars) in an effort to further boost its capital base ahead of public listing.

The bank's first bond offers in 2005 were snapped up recently by institutional investors through the central bank's debt floating system.

Banking regulators have given the green light for the BOC to float a total of 60 billion yuan (about 7.2 billion dollars) in subordinated debts, and the bank issued 14.07 billion yuan (some 1.7 billion dollars) and 12 billion yuan (1.4 billion dollars) in such debts last July and October, respectively.

This has helped raise the BOC's capital adequacy ratio, a measure of its available capital in proportion to its outstanding loans, to 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.

A BOC spokesman said the new debt issue would go on replenishing the bank's capital and help enhance its ability of warding off business risks and sharpen its competitive edge on the international market.

Subordinated bond holders rank low among creditors, which allows buyers to demand a relatively high coupon interest rate. The new debts from the BOC bear ten- and 15-year fixed rates -- an annual 4.83 percent and 5.18 percent, respectively, as well as floating rates.

The BOC and China Construction Bank are leading the government's latest, aggressive program to reform the banking system, bracing themselves for foreign competition which, in line with China's commitment to the WTO, will have unrestricted market access here by 2006.

The two best performers of China's Big Four -- the Industrial and Commercial Bank of China and Agricultural Bank of China -- each received 22.5 billion US dollars from the central government in a bailout package.

They have both introduced joint-stock systems and are currently talking with potential foreign investors, who will bring the debt-laden Chinese banks more sophisticated and market-oriented management.

President Li Lihui of the BOC confirmed earlier that his bank would "create conditions" for a stock market debut this year.

In 2004, the bank either recovered or wrote off more than 250 billion yuan (some 30.2 billion dollars) in non-performing assets, which analysts say were largely piled up owing to reckless lending to money-losing state-owned enterprises for past decades.