Chinese bank ICBC aims to list in two years

Industrial and Commercial Bank of China (ICBC), the country's largest state commercial lender, is planning to list in 2006 as part of package of government mandated reforms meant to resuscitate the ailing sector.
ICBC aims to earn a combined profit of 240 billion yuan (29 billion dollars) in the next three years and cut its non-performing loan (NPL) ratio to below 10 percent, the official Xinhua news agency cited an unnamed bank spokesman as saying.
This would involve a reduction of 300 billion yuan as part of its efforts to prepare for a stock market debut, the report said.
An initial public offering (IPO) is part of government efforts to make ICBC commercially viable and will follow a bailout package of about 40 billion dollars meant to lift the bank out of technical insolvency.
The cash injection for the ICBC from foreign exchange reserves is much larger than the 22.5 billion dollars each given to the China Construction Bank and the Bank of China in late December as part of preparations for their eventual listing, expected this year and next.
Chinese state media have said a total of about 120 billion dollars would be injected into the big four state-owned banks to clean up their balance sheets and prepare them for listing.
The acceleration of state-banks reforms are imperative to ensuring their survival ahead of the deregulation of China's financial markets by end 2006, but worse-than admitted to debt loads could scuttle plans.
The China Construction Bank, which has said it is determined to IPO some time this year, is in need of more capital to adequately cover risky loans if it is to float shares, analysts said.
Zhang Enzhao, China Construction Bank president, said in an interview with the government mouthpiece, the People's Daily, that the bank had only provisioned for a level of slightly more than 40 percent of risky loans.
That is well below financial peer Bank of China, and the standards laid out by regulators which demand 10 percent asset to debt ratios.
Insufficient provisions mean "hidden losses," and the bank needs more capital, either from operating profits or external sources, to cover these shortcomings, said Ouyang Gang, a banking analyst with United Securities.