Sources close to the Industrial and Commercial Bank of China (ICBC) Tuesday dismissed media reports that the central government is on the verge of giving the nod to a US$30 billion capital injection into the nation's biggest state-owned commercial lender.

The Financial Times reported yesterday that the Chinese Government is expected to approve a US$30 billion recapitalization plan by the end of this month for the ICBC.

The move will prepare the bank for an initial public offering (IPO) in Hong Kong, or New York, which will value it at more than US$10 billion, the Financial Times report said.

The ICBC had earlier said it was planning a joint-stock restructuring that would lead to flotation on the stock market, and was reportedly expecting approval from the China Banking Regulatory Commission (CBRC) by the end of last year.

But the details of yesterday's media report were "incorrect," the source said, without elaborating.

The CBRC declined to comment on the report, but an official from the Ministry of Finance said "no decision had been reached" yet on the bank's reform plan.

China chose the Bank of China and China Construction Bank at the end of 2003 for a pilot joint-stock reform scheme for its four major state-owned lenders, and injected a combined US$45 billion into the banks. The other two are the ICBC and Agricultural Bank of China.

Vice-Minister of Finance Lou Jiwei said late last year that the government is also considering a recapitalization for the ICBC and Agricultural Bank of China.

Analysts say the ICBC would need a larger recapitalization than the pilot banks, given its huge size, its low capital adequacy ratio, and high ratio of bad loans.

(China Daily January 5, 2004)