BEIJING
- The Agricultural Bank of China (ABC) said
January 17 it is expected to complete a
state-aided restructuring by the end of this year,
and will later strive to list the whole bank in
the stock market, instead of a rumored partial
listing.
"[The restructuring program]
should be completed before the full opening-up as
required by World Trade Organization commitments,"
said Han Zhongqi, vice-president of the state-
owned
lender. Han was alluding to the deadline at the
end of this year, when China is scheduled to grant
foreign banks full access to the local market.
China's second-largest commercial bank, by
amount of assets, is still awaiting regulatory
approval for a bailout scheme. Its three peers in
the "big four" state-owned banks - the Bank of
China (BOC), China Construction Bank (CCB) and
Industrial and Commercial Bank of China (ICBC) -
have received a combined US$60 billion in capital
injections from the Chinese government over the
past two years.
Although ABC is viewed as
the weakest of the four, Han said restructuring
his bank would not be significantly costlier than
rescuing the other three. This excludes the 50
billion yuan ($6.2 billion) of losses imposed on
the bank due to earlier financial reforms. "Taking
[these losses] out, the cost of reform for the
Agricultural Bank of China will not be far from
that for the Industrial and Commercial Bank of
China," Han said.
The ICBC received a $15
billion capital infusion last April, but 270
billion yuan of non-performing loans were
transferred from its books to asset management
companies.
Han dismissed rumors that the
bank aims to list only part of its assets in an
initial public offering that he insisted would
still be a few years away. Rumors about the
partial offering had already caused unrest at some
bank branches, as employees feared they may be
left out in the state bailout program. Although
the cost of a one-off reform will likely be large,
listing parts of the bank might leave problems
with some branches unsolved. "That risk might
grow, and the eventual cost might be even bigger,"
he said.
The restructuring of the ABC is
widely seen as the most complex restructuring of
all the "big four" banks. The ABC has the most
cumbersome distribution network among all banks in
China. It still has 31,000 banking outlets
nationwide, more than double what the CCB owns,
even after shutting down more than 20,000 outlets
in the past few years. The official said about
480,000 staff members are on the bank's payroll,
which exceeds the staff of the ICBC - the largest
bank by assets - by 100,000 people.
ABC's
stake in China's rural areas is another reason the
bank was the last to start joint-stock
restructuring. The ABC restructuring cannot be
considered an isolated problem, but rather, one
crucial part of a rural financial reform policy
that the state is still pondering. After years of
being a major lender to Chinese farmers, the bank
still has 39% of its loans in agriculture-related
sectors, and 61% of its outlets in counties and
the countryside. But internal reforms have been
going on in the past few years, ranging from
management and technology to personnel training
and credit-culture innovation, Han said.
