The Industrial and Commercial Bank of China (ICBC) will enjoy a sharp rise in its capital adequacy with its upcoming initial public offering (IPO), according to the bank's vice-president Li Xiaopeng.

Li said that after the IPO, the bank's capital adequacy ratio (CAR) will be among the best in the world, enabling the bank to increase its involvement in the international market.

He said the CAR, the measure of a bank's own capital in proportion to its outstanding loans, of China's major state-run commercial banks should reach 12 percent after they sell shares to the public.

"As the Chinese financial market opens wider, Chinese commercial banks will gain in strength and speed up overseas equity investments," said Li.

In the past, Chinese banks were prevented from opening more branches overseas by their low CAR, which fell short of the required international standard of eight percent. However, by the end of last year, ICBC's CAR had risen to 10.26 percent.

Reforms in recent years have improved Chinese banks' business performance, asset quality and capital strength, encouraging them to explore overseas markets, said Li.

ICBC announced its decision to go public in May this year, following on the heels of the China Construction Bank and Bank of China in a market listing rush.

Later this week, the China Securities Regulatory Commission (CSRC) will announce its decision on the application of ICBC to list on the Shanghai Stock Exchange and the Hong Kong Stock Exchange in October. The IPO is expected to hit a record high.

Source: Xinhua