China's top banking regulator Liu Mingkang on Wednesday acknowledged it is critical for domestic commercial banks to go public in overseas markets, but that it is still hard to decide on the timing of listings.

This was in line with analysts' prediction that major state commercial banks including the Bank of China (BOC) and China Construction Bank (CCB) would seek stock market listings in Hong Kong, New York or London given worse and worse performance domestically.

Addressing the 2005 Fortune Global Forum, Liu, chairman of the China Banking Regulatory Commission said to issue shares overseas is "of great importance" for the reform of China's commercial banks.

He even said that "all Chinese commercial banks would take into consideration overseas listings", though the timing depends on many factors.

"The most important thing is to make full preparations. Banks should be responsible for potential investors," Liu said.

"Banks should accept pressure from the market and its requirement of transparency."

While China is opening its financial markets to foreign rivals under a commitment to the World Trade Organization, the government is kicking off aggressive reforms on state banks, which are burdened by billions of dollars in unpaid loans to state companies.

The central government poured a combined 45 billion US dollars in foreign exchange reserves into the BOC and CCB to boost its capital base at the end of 2003. Both have turned into joint-stock companies and are inviting foreign investors to help improve corporate governance.

Guo Shuqing, the CCB's new chairman, said earlier that listing is the bank's "key task" this year, but the process is arduous and there is not much time left.

Last month China announced a new bailout plan to inject 15 billion dollars into its biggest commercial bank, the Industrial and Commercial Bank of China (ICBC), as part of efforts to turn it into a profitable, independent competitor.

The Chinese authorities have repeatedly said that they are also mulling over reform of the Agricultural Bank of China (ABC), which has the most serious debt problem among the "Big Four" banks, including the BOC, CCB and ICBC.

On Wednesday, Liu Mingkang said domestic banks have made " substantial" progress in corporate governance and asset management in the past two or three years.

"In the past all decisions were made by individuals, but now we have boards of directors, so decisions cannot be made by someone alone," he said.

Liu said he believes that by 2006 80 percent of Chinese banks can meet the 8 percent capital adequacy ratio (CAR) requirement, the international standard. The CAR represents a bank's own capital in proportion to its total lending as a measure used to control asset quality.

If banks have a high enough CAR and strong ability to cover loan losses, it is easy to manage the country's banking system, the top regulator said.

Source: Xinhua