On Wednesday, the bank opened a branch in Tokyo, its fifth overseas one, and it has now set its sights on opening up an office in Seoul, South Korea.

The Tokyo branch will take part in all major business, including trade financing, loans and securities, which are approved by the Japanese banking supervision authorities, a bank spokesman said.

"We are now actively preparing to open a branch in Seoul," he added.

The spokesman said China's large commercial banks will be playing an increasing role in the international financial market as a result of the nation's accession to the World Trade Organization.

In coming years, the China Construction Bank will open branches in all major international financial centers, emerging markets, and areas in which China has good trade links, he said.

Business expansion should help increase the bank's overall profits and competitiveness, and not merely increase the number of overseas branches, he said.

By the end of last year, the total assets of the bank's overseas operations reached US$4.9 billion, an increase of 39.94 per cent compared with a year ago.

These operations' pre-tax profits stood at US$25.51 million, an increase of 17.34 per cent.

Zhang Enzhao, president of the China Construction Bank, said it is now speeding up reforms to prepare for a listing on the stock exchanges.

"Our goal is to establish a modern commercial bank with good corporate governance and sound performance that will make us a competitive heavyweight in the global financial market."

Ding Maozhan, director of the policy research department of Beijing's Chongwen district government, said that, in order to get listed, China's four largest State-owned commercial banks would have to lower their non-performing loan (NPL) rates, get rid of historical financial burdens and raise their capital adequacy to international standards.

The country's commercial bank law stipulates that commercial banks' capital adequacy ratio will have to reach 8 percent, the minimum required by the Basel agreement reached by international banking managers.

This means China's commercial banks will have to achieve the goal before they get listed, Ding said.

"With an aim to raise capital adequacy, commercial banks will have to reduce the amount of risk assets," Ding said.

The central People's Bank of China required that commercial banks drop their NPL ratios by 2 to 3 percentage points annually over the next few years.

China Construction Bank said last month that its NPL ratio shrank by 3.99 percentage points from 2001 to 15.36 percent at the end of last year.

(China Daily February 14, 2003)