A government investment agency has agreed to inject US dollars equivalent to 130 billion yuan of new capital into the Agricultural Bank of China (ABC), marking a step forward in the State-owned bank's shareholding reform and bringing it closer toward a public listing.
The bank said in a statement that it signed the capital injection deal yesterday with Central Huijin, a subsidiary of China Investment Corp, the country's sovereign wealth fund.
After the capital injection, Central Huijin will hold a 50 percent stake in the bank, with the remainder held by the Ministry of Finance.
Central Huijin and the ministry will also jointly establish a fund to take over and manage the bank's non-performing assets, which amounted to 800 billion yuan.
This arrangement is expected to help reduce the bank's non-performing loan ratio to 4.1 percent from the current level of more than 20 percent, four times the industry average of 5.6 percent.
Pan Gongsheng, the bank's vice-president, told reporters after the signing ceremony that a joint stock company would be established at the end of 2008 to hold shares in the bank as part of its restructuring from a State-owned lender into a commercially oriented institution.
Pan added that the bank had yet to decide whether to introduce strategic investors into the joint stock company.
Over the past five years, three other major State-owned banks completed their shareholding restructuring and became publicly traded companies listed on the Shanghai and Hong Kong bourses.
ABC will be the fourth State-owned commercial bank to go through the reform process.
By the end of September, the total amount of the bank's loan portfolio rose 8.6 percent to 3.78 trillion yuan and its deposits amounted to 5.97 trillion yuan, up 13 percent from the beginning of 2008.
The bank posted a profit before provision of 98 billion yuan for the first nine months of 2008, up 35 percent year-on-year.
Pan was earlier quoted by the official Shanghai Securities News as saying that the bank would be technically ready for an initial public offering by the second half of 2009.
Source: China Daily
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