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

To: RealMuLan who wrote (5408)	9/5/2005 12:08:39 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Bank of China bad-loan ratio rises By Nerys Avery and Luo Jun Bloomberg News TUESDAY, SEPTEMBER 6, 2005 BEIJING Bank of China, the country's second-largest lender, said Monday that its bad-loan ratio rose 0.44 percentage points in July as loan growth slowed. The Bank of China's nonperforming loan ratio rose to 4.82 percent as of July 31 from 4.38 percent at the end of June, Zhu Min, executive assistant president of the lender, said in a speech at a business summit meeting between China and the European Union in Beijing. "There are signs of an economic slowdown and deterioration in companies' profitability in the second half and probably next year," said Zhang Xi, a banking analyst at Haitong Securities in Shanghai. "Banks are tightening loan requirements to save for a rainy day." Bank of China's loan-growth rate has been slower than the overall banking industry as the lender tried to become more prudent in making loans to prevent them from failing. In 2004, the lender's loan-growth rate was 11 percent, compared with an industry average of 15 percent to 18 percent. So far this year, Bank of China's loans grew 8 percent from the end of 2005, Zhu said. Bank of China, which received a $22.5 billion government bailout in December 2003, needs to cut bad loans to attract international investors to its share sale. The lender also wants to raise capital, improve management and install risk controls, so it can meet competition from HSBC Holdings, Bank of America and overseas banks, which can offer local currency services in China at the end of next year. The bad-loan ratio at 208 financial institutions based in Hong Kong was 1.56 percent at the end of 2004, according to the Hong Kong Monetary Authority. Bank of China hired Goldman Sachs Group, UBS and Bank of China International to underwrite an overseas initial public offering, scheduled for the first quarter of next year. The lender plans to raise at least $5 billion, people familiar with the plan said last month. Temasek Holdings, Singapore's state-owned investment company, agreed last week to pay $3.1 billion for 10 percent of Bank of China, its third such purchase this year in China. Royal Bank of Scotland, Merrill Lynch and a foundation set up by Li Ka-shing, a businessman in Hong Kong, agreed on Aug. 18 to invest a total of $3.1 billion for 10 percent of Bank of China. The investments gave the foreigner institutions access to 11,000 branches at Bank of China, which has 9 percent of the $1.65 trillion in savings in China. China's economy grew 9.5 percent in the second quarter and the government is inviting foreign investment into its banking industry to reduce bad loans, improve risk management and meet pledges made when it joined the World Trade Organization in 2001. iht.com