China lets agricultural bank start separate rural business unit
Monday, 1 June 2009
BEIJING, May 31 (Bloomberg): Agricultural Bank of China received approval from the nation's regulator to put its rural businesses into a separate unit, to boost farm lending and pave the way for the bank's initial public offering.
The rural finance unit will offer loans and develop financial services in rural areas smaller than counties, the China Banking Regulatory Commission said in a statement dated April 23 on its Web site today. The approval took effect on May 1, it said.
Agricultural, constrained by its rural business, has the weakest capital position and highest bad-loan ratio among the nation's four biggest state-owned banks, even after getting $19 billion from the government in October. That may make the lender less attractive to equity investors as it prepares to sell shares as early as the second half of this year.
The rural finance unit will have its own capital, lending and earning requirements, which will be assessed by the regulator, according to the statement.
Loans by the unit should reach 50 per cent of new deposits in the second year after the completion of its financial restructuring, the regulator said. The unit's return-on-assets ratio should reach 0.5 per cent, and its bad-loan ratio should be kept below 5 per cent, the commission added.
The rural finance unit will offer loans and develop financial services in rural areas smaller than counties, the China Banking Regulatory Commission said in a statement dated April 23 on its Web site today. The approval took effect on May 1, it said.
Agricultural, constrained by its rural business, has the weakest capital position and highest bad-loan ratio among the nation's four biggest state-owned banks, even after getting $19 billion from the government in October. That may make the lender less attractive to equity investors as it prepares to sell shares as early as the second half of this year.
The rural finance unit will have its own capital, lending and earning requirements, which will be assessed by the regulator, according to the statement.
Loans by the unit should reach 50 per cent of new deposits in the second year after the completion of its financial restructuring, the regulator said. The unit's return-on-assets ratio should reach 0.5 per cent, and its bad-loan ratio should be kept below 5 per cent, the commission added.