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The China Construction Bank, one of the "big four" state-owned commercial banks, will issue up to 40 billion yuan in subordinated bonds from around the middle of this month. The move aims to boost the bank's capital adequacy ratio, as it prepares to float shares overseas by 2005.
The bank aims to complete its planned bond issue by the end of the first half of 2005. The issue would be the largest ever by a domestic lender. Sources say that after the issue, the bank's capital ratio would stand at eight percent or higher.
The lender, along with the Bank of China, won a US$45 billion capital injection last year that kick-started reforms in the country's creaky financial sector. The bank will begin issuing a first tranche of 10 billion yuan in bonds around the middle of this month. About half of that 10 billion would comprise bonds based on a fixed coupon, while the other half would carry a floating rate.
The banks have been saddled with more than US$200 billion in non-performing loans after decades of politically driven lending. The government is pushing them to revamp their balance sheets ahead of near-full foreign competition by 2007.
(CCTV.com July 5, 2004)
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