Bank of Construction repudiates acquisition rumors

The Construction Bank of China (CBC) has no intention of acquiring stakes in Bank of America (Asia) or Hong Kong-based Wing Lung Bank, CBC sources told Xinhua Friday.

The Xinhua-run Shanghai Securities News quoted unnamed CBC sources as saying that the acquisition rumors reported by foreign media were "groundless".

CBC released a circular denying an acquisition rumor relating to Wall Street investment bank Bear Stearns in April.

The newspaper said that the acquisition buzz might reflect CBC's solid performance after going public in Hong Kong last October.

The bank's return on assets - 1.11 percent - and its return on equities - 21.59 percent - are currently the highest of China's Big Four state banks and close to the average level of banks in developed countries.

These two healthy indices are believed to have stoked speculation that CBC may be hunting for an overseas acquisition, said the newspaper.

CBC's 2005 annual report stated that its core capital reached 287.7 billion yuan (36 billion U.S. dollars) by last December, up 47.1 percent on a year earlier. Its capital adequacy ratio, a measure of capital in relation to outstanding loans, rose to 13.57 percent, up 2.28 percentage points over 2004.

The non-performing loan ratio fell 0.08 percentage points from 2004 to 3.84 percent last year, the lowest of the Big Four banks. Apart from CBC, the Big Four include the Industrial and Commercial Bank of China Corporation, Bank of China and Agricultural Bank of China.

Source: Xinhua