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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2252)	12/26/2003 9:54:30 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Bank of China to get US$20b govt bailout BANK of China, the nation's second-largest lender by assets, will get a US$20 billion government bailout as soon as next week to help write off bad loans before a first-time share sale in 2005, said an executive at the bank. China's oldest lender, which will receive the capital in US dollars, will use the funds to reduce bad loans and speed up plans to sell shares, said the official, who asked not to be identified. Bank of China is one of four state-owned banks trying to reduce US$400 billion of bad loans created by five decades of lending to unprofitable government companies. China plans to sell stakes in Bank of China, China Construction Bank and two other lenders to reduce bad loans estimated at more than a fifth of their total lending. Bank of China wants to cut its bad-loan ratio to below 10 per cent from 17.98 per cent now, to make it more attractive to investors and to compete with overseas competitors, including Citigroup Inc, which can enter China without restrictions at the end of 2005. 'Bank of China is qualified to be the first lender to go public as it has a higher capital adequacy ratio and better management than the others,' said Wu Yonggang, a bank analyst at Guotai Junan Securities Co in Shanghai. 'The injection will greatly help Bank of China cut its bad-debt ratio to below 10 per cent,' he said. Bank of China said it had loans and overdrafts of 1.74 trillion yuan (S$356.7 billion) at the end of 2002, indicating it has about US$37.7 billion of bad loans, some of which were place in an asset management company in 1999. The Beijing-based lender doesn't give a breakdown of its bad loans. The bank's asset management company has disposed of 63.7 billion yuan of the bad assets since 1999. China's second bailout of the banks in five years is aimed at cutting total bad loans in the system estimated by the government at US$500 billion. - Bloomberg business-times.asia1.com.sg