The majority of the assets - up to 6 billion yuan (US$722 million) worth of cars and real estate - was from the bank's 36 branches at the provincial level. The remainder comes from China Cinda and will be sold to domestic and foreign investors.

The auction lasts until November 3.

Yang Xiaoyang, head of the bank's Asset Preservation Department, said China Construction has to speed up the disposal of its bad assets to fulfil its aim of becoming the country's first domestically listed State-owned bank.

Bank President Zhang Enzhao earlier this year unveiled a timetable for the listing plan.

"The listing of the bank will mark the gradual break-up via flotation within four to five years, allowing parts of its assets to be listed on the market," he said in May.

Zhang said after the bank's restructuring process, other assets will be gradually transferred to the listed arms as a move to realize a final and complete listing.

Yang said to achieve the listing the bank has to drop its non-performing loans (NPL) ratio by 2 to 3 percentage points a year during the coming three to five years. He said by 2005, the NPL ratio should be less than 10 per cent.

The bank, which handed 250 billion yuan (US$30.1 billion) worth of non-performing assets over to China Cinda in 1999, still had about 270 billion yuan (US$32.5 billion) worth of non-performing assets at the end of June.

At that time, the bank's NPLs, by the international standard of five category classification, stood at 17.29 per cent.

"If we don't speed up disposing of the non-performing assets, our bank can't get listed earlier," Yang said.

China Construction Bank has completed initial talks with the US investment bank Morgan Stanley for the sale of a package of bad assets with a book value of more than 4 billion yuan (US$481 million), he revealed.

"Both sides have completed tentative talks on the price and the way to conduct transactions," he said.

Huang Jinlao, a senior researcher with the International Financial Research Institute at the Bank of China, said: "Domestic banks are facing increasing pressure as more foreign banks come to China now that the country has become a member of the World Trade Organization."

He said the major tasks for the "big four" banks are to improve their corporate governance structures, lower their NPL rates, get rid of their historical financial burdens and raise their capital adequacy to international standards.

(China Daily October 29, 2002)