The bank will announce a price range for the shares on Friday based on strategic and institutional investor interest. The final price will be decided after roadshows, which will conclude next Tuesday.

The long-awaited flotation will make the bank the fourth public bank in China after Shenzhen Development Bank, Pudong Development Bank and Minsheng Bank. The shares will be listed on the Shanghai Stock Exchange after the IPO issuance is completed.

Ma Weihua, president of the bank, said his bank hopes the listing will "bring the bank to the international level in the areas of management expertise and product development."

Bank officials said the IPO is expected to raise more than 10 billion yuan (US$1.2 billion) for the Shenzhen-based bank. If the target is achieved, the IPO would be the second only in size in China to the 11.82 billion yuan (US$1.4 billion) listing by China Petroleum and Chemical Corp (Sinopec)last August.

"Net proceeds will be used to raise our bank's capital to enhance operational capacity and raise our ability to handle risks," said the prospectus.

Part of the money will be used to build more outlets. The prospectus said 18 branches will be added in three years, while 11 sub-branches will be upgraded to branches.

About 2.3 billion yuan (US$278 million) will be poured into e-banking facilities.

The IPO should also help raise the bank's capital adequacy ratio to 12 percent from the 10.2 percent level at the end of 2001.

The bank, famous for its quality service and online banking business, posted a net profit of 1.43 billion yuan (US$173 million) in 2001, a hefty 78 percent up from the 803.8 million yuan (US$97 million) figure for the previous year.

Analysts believe that the IPO of China Merchants -- one of China's best-regarded banks -- will be a success, as banking shares are generally hotly pursued by investors.

"China Merchants Bank is one of the best Chinese banks in terms of overall performance, including profitability and capital adequacy ratio," said banking analyst Hu Zhiguang of China Securities.

The ratio of the bank's non-performing loans has kept declining over the past three years, from 19.55 percent in 1999 to 13.62 percent in 2000 and 10.25 percent at the end of last year. This compares with a national level of over 25 percent.

China Merchants Bank was established in 1987. A joint stock reform was conducted in 1994. By the end of last year, the bank had 106 corporate shareholders.

Although a young bank, China Merchants has already become one of the most profitable banks in China, with total assets of 266 billion yuan (US$32 billion).

And some of its services, such as e-banking and credit cards have already become the market leaders in China, where the banking market is still dominated by the four largest State-owned commercial banks.

The China Merchants Shipping Co, a wholly owned subsidiary of the China Merchants Group, will remain the largest single shareholder after the IPO, according to a bank official.

(China Daily March 20, 2002)