CITIC issues bonds to finance bank listing

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Last updated at: (Beijing Time) Wednesday, December 17, 2003

CITIC issues bonds to finance bank listing

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The China International Trust and Investment Corp. (CITIC) issued 10-billion-yuan (1.21-billion-US dollars) in company bonds from Dec. 12 to Tuesday to finance the listing of its solely-owned CITIC Industrial Bank.

The financing included 6 billion yuan for the bank's reserves to increase its capital adequacy rate, said Dou Jianzhong, CITIC vice-general manager and president of the bank.

Insiders said the bank was increasing its capital adequacy rate to meet the requirements of listing.

The People's Bank of China (PBOC), China's central bank, has stipulated that a joint stock commercial bank is required to have a capital adequacy rate of 8 percent by 2005.

The capital adequacy rate of CITIC Industrial Bank reached 5.85percent by the end of last year whereas the non-performing loans rate stood at 10.35 percent.

With the 6-billion-yuan fund, the bank would meet the requirements, insiders said.

The 10-billion-yuan bonds included 6 billion yuan that would be paid in 20 years and 4 billion in ten years.

"We do face some difficulties in increasing our reserves while businesses are rapidly growing, but with the support from CITIC, it will be easier," said Liu Zhiqiang, the bank's vice-president.

CITIC returned 1.4 billion yuan (169.29 million dollars) of the bank's profits last year, Liu said, adding that strategic investors could also help increase reserves.

The bank would also like to introduce strategic investors to help improve its business, Dou said, adding that it had contacted several foreign banks, including Citibank and HSBC.

Other listing requirements included reducing non-performing loans and transforming ownership, Liu said.

The bank had to become a joint-stock bank with at least five shareholders to meet the requirement of listing.

Dou said in late October that the bank would unveil a new scheme of ownership reform by November, but so far no scheme has been announced.

Following the listing of Huaxia Bank in September, CITIC Industrial Bank has shown great interest in listing.

But the bank's ownership reform has had problems. Hong Kong-based CITIC Ka Wah Bank, which is 56 percent owned by CITIC, had planned to buy into the CITIC Industrial Bank, but the scheme was rejected by the Hong Kong Monetary Administration in March.

CITIC, a multinational corporate group founded in 1979, has 44 subsidiaries with total assets of 501.1 billion yuan (60.59 billion dollars) and reported post-tax profits of 2.26 billion yuan (273.28 million dollars) last year.

CITIC Industrial Bank, founded in 1987, reported a pre-tax profit of 2.24 billion yuan (270.86 million dollars) with total assets of 335.16 billion yuan (40.53 billion dollars) last year.

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