The Industry and Commercial Bank of China (ICBC), the country's largest lender, is likely to raise as much as 30 billion yuan (US$3.75 billion) with A shares in its listing on the Shanghai stock market.

 

The bank is expected to issue 17.9 billion A shares and 53.6 billion H shares, accounting for 15 percent and 5 percent of its total equity respectively, in a dual listing in Shanghai and Hong Kong, the China Securities News reported yesterday, quoting an unidentified source.

 

The report did not reveal when the lender would list on the two stock exchanges, but said the listing date will depend on trade in the two markets.

 

Banking shares in the Shanghai market yesterday witnessed a climb following the report, because the ICBC might issue fewer shares than most investors expected.

 

But the banking lion will still be likely to exceed the Bank of China as the largest initial public offering (IPO) in A shares listed within the year. The later raised around 20 billion yuan (US$2.5 billion) on the A shares market in June.

 

Analysts had predicted that the domestic stock market was not likely to rise partly due to listing large IPOs such as the ICBC.

 

"The largest lender in the country listing domestically will certainly put pressure on the A shares market," said Zhang Qi, an analyst with Haitong Securities. "And the government is unlikely slow steps to launch new IPOs."

 

To ease the pressure brought by new IPOs, the insurance regulator announced that it would increase the ratio that insurers can invest in the stock market from 1 percent to 4 percent.

 

China Securities Regulatory Commission will also allow securities firms to raise private equity to invest in the stock market in a draft rule issued on Monday.

 

The rule encourages subscriptions in the latest IPOs as it has no limitations on how much private equity can subscribe in an IPO.

 

The ICBC currently has total assets of 65 trillion yuan (US$8.125 trillion). The Central Huijin Company Ltd, a government investment arm, and the Ministry of Finance each hold 43.2 percent.

 

Taking Godman Sachs' 8.45 percent and the Social Securities Fund's 5 percent into account, the lender will probably issue a combined 53.6 billion H shares and A shares.

 

The total capital that the ICBC will rise might reach 50 billion yuan (6.25 billion) if calculated with the Bank of China's 3.08 yuan (38.5 US cents) per share.

 

(China Daily July 26, 2006)