Bank of China (BOC) announced yesterday that Bank of China International, Goldman Sachs Group and UBS would be the financial advisers and lead underwriters for its planned initial public offering (IPO) sometime next year.

Spokesman Wang Zhaowen said the bank had chosen the three after a rigorous assessment and taking various factors into account.

All the three banks enjoy a strong position and good reputation in the international capital markets in Asia, Europe and the United States, Wang said.

They also have long-established ties with BOC and took part in many operations including the listing of BOC Hong Kong, he said.

"We believe that the participation of the three will help us speed up the preparation for the overseas IPO as quick as possible," Wang said.

Economists pointed out that BOC's selection of the three financial advisers and lead underwriters suggests the bank has moved a step further towards the IPO.

Domestic banks, which are expected to face fierce competition from foreign counterparts after the end of 2006, have been taking a series of measures including listing and introduction of foreign strategic investors to strengthen their position.

China Construction Bank, which has signed agreements with Bank of America and Temasek Holdings (Private) Limited on forging strategic partnerships, plans to list shares in Hong Kong before the end of this year.

On August 18, BOC also signed a strategic investment and cooperation agreement with Royal Bank of Scotland Group (RBS), which will spend US$3.1 billion for 10-percent interest in the Chinese bank.

Under the agreement, the two banks will cooperate closely in a range of areas including credit cards, wealth management, corporate banking and personal insurance.

The two also intend to establish a cooperative relationship in management, including corporate governance, risk, financial and human resources management, and information technology.

Officials with BOC believe the cooperation with RBS is crucial to transforming the bank's operational structure, enhancing management capability, improving competitiveness and increasing profitability.

The bank, which received a US$22.5 billion capital injection from the State in late 2003, was chosen by the central government as a pilot project in the country's banking reform.

It was restructured into a joint-stock company last year.

During the first half of this year, the bank recorded fast growth in both operating and net profit; but officials declined to provide detailed figures because they need to be audited and submitted to the board of directors first.

The bank's unaudited operating profit rose 11.56 percent during the first half of this year.

At the end of June, the bank's non-performing credit rate declined to 4.38 percent from 5.12 percent at the end of last year.

Its capital adequacy ratio was 10.04 percent at the end of last year.

(China Daily August 31, 2005)