Bank of China Limited (BOC; ; often abbreviated as 中行)() is one of the big four state-owned commercial banks of the People's Republic of China. Founded in 1912, it is the oldest bank in China. It was 100% owned by the central government, via Central Huijin Investment and National Council for Social Security Fund (SSF) in the past but as of June 2006, various non-governmental and foreign investors and shareholders have together held a stake of over 26%.

Basic facts

• It has over RMB 3 trillion in assets, making it in the Fortune Global 500 for the past 17 years.
• It is the most international of China's banks, with branches on every 'major' continent.
• It is the no.2 lender in China overall, the no.1 lender to non-institutions, and the no.1 foreign exchange lender. (The no.1 lender in China is the Industrial and Commercial Bank of China)
• In 2002, it made RMB52.7 billion profit, an increase of over 20 per cent from the previous year.
• It listed the fourth largest IPO in the world ever on the Hong Kong Stock Exchange on June 1, 2006, raising US$9.7 billion. http://news.xinhuanet.com/english/2006-06/01/content_4632335_2.htm This became US$11.2 billion after it exercised its share over-allotment option.
• It is the 8th largest bank in the world by market capitalization value. http://money.cnn.com/2006/06/01/news/international/bc.financial.china.boc.reut/?section=money_news_international

Ownership

• As of June 7, 2006, the ownership of 'H' shares in the Bank of China (SEHK:3988) has been:
  • Central Huijin Investment: 69.265% (171,325,404,740 shares)
  • RBS China: 8.467% (20,942,736,236 shares)
  • AFH Pte. Ltd.: 4.765% (11,785,825,118 shares)
  • SSF: 4.576% (11,317,729,129 shares)
  • UBS AG: 1.366% (3,377,860,684 shares)
  • ADB: 0.205% (506,679,102 shares)
  • Investors who received H shares from the Global Offering (IPO): 11.356% (28,089,421,000 shares)

• Asia Financial Holdings Pte. Ltd. (AFH) is a wholly-owned subsidiary of Temasek.

• The Over-Allotment (H-share) Option was exercised in June 7, 2006, hence the dilution in ownership by the main investors.

• The Bank of China is planning on making a domestic IPO A-share listing on the Shanghai stock market by July 5, 2006. See above for details.

Operations outside of (mainland) China

Bank of China operates as a private enterprise outside of China, but still linked with the state-owned BOC in China.

BOC started operations in Hong Kong in 1917 and has become a major player, challenging British banks in the territory.

The Hong Kong operations of the Bank of China were regrouped into Bank of China (Hong Kong) in 2001 and later BOCHK got listed on the Hong Kong Stock Exchange in October 2002. Headquarters of the BOCHK are located in the Bank of China Tower, which was designed by renowned architect I.M.Pei and was opened to the public in 1990 as the tallest building of Hong Kong at that time.

Bank of China became a limited company in August 2004.

It listed on the Hong Kong Stock Exchange (independently from BOCHK) (SEHK:3988) by floating the largest IPO in the world by any institution since 2000 on June 1st, 2006, raising US$9.7 billion. The IPO was the most heavily oversubscribed in the history of the Hong Kong Stock Exchange (around 76 times oversubscribed). Although some financial analysts advised caution due to the worrying amounts of non-performing loans, this hardly deterred investors. The IPO share price started at HK$2.95 per share and jumped 15% (to HK$3.40) after the first day of trading.

They plan on hosting another IPO on the Shanghai Stock Exchange later in 2006, hoping to raise around 20 billion yuan (US$2.5 billion).

BOC also operates outside of mainland China in a number of provinces and countries including:

• Hong Kong (since 2006 it has floated its shares on the Hong Kong Stock Exchange)
• Macau
• Canada - as Bank of China (Canada) Limited
• United States - Bank of China (America) Limited
• Singapore
• Philippines

Expansion

Like many other Chinese companies, BOC has been exploring outside markets and has become less dependent on the state for its day-to-day operations. BOC plans to be a dominant financial sector player in Asia and beyond.

A list of other Chinese financial sector players linked with the People's Bank of China and/or the Bank of China:

• Agricultural Bank of China
• Bank of China (Hong Kong)
• China Construction Bank
• CITIC
• Industrial and Commercial Bank of China
• Ping An of China (insurance)
• Shenzhen Development Bank

Events in 2005

• Swiss bank UBS AG confirmed Thursday September 12005 that it is in talks to take a stake in the Bank of China, China's second-biggest state-run commercial bank. "We announced at the end of June we hope to invest $500 million to become a strategic partner of Bank of China. That's still the case, and talks continue," Mark Panday, a UBS spokesman in Hong Kong, told Dow Jones Newswires. The Financial News, a newspaper backed by the Chinese central bank, said Thursday that UBS was in the final stages of the negotiations. It cited Bank of China spokesman Wang Zhaowen as saying that the investment was expected. "However the detailed figures haven't been decided upon yet. They're still under discussion," it quoted him as saying. That report followed news that Singapore government-owned Temasek Holdings Pte. Ltd. plans to pay about $3.1 billion for a 10 percent stake in Bank of China. Temasek, the Singapore government's investment arm, said it will acquire the interest in the state-owned commercial bank through its wholly owned subsidiary, Asia Financial Holdings. "Temasek has also undertaken to subscribe for an additional $500 million worth of shares during Bank of China's initial public offering," the company said in a statement issued late Wednesday.

On Wednesday it was disclosed that investors including Goldman Sachs Group Inc. and American Express Co., both headquartered in New York, and Allianz AG of Germany had signed a deal to buy a 10 percent stake in China's biggest lender, Industrial & Commercial Bank of China, for more than $3 billion. An ICBC official, who spoke on condition he not be named, said the investment would be made after the bank is restructured as a stockholding company in mid-October. The two banks are China's largest state-owned commercial banks. Foreign banks have been staking out strategic alliances in China, hoping to be well-positioned for the eventual full opening of the banking industry to foreign competition in late 2006. Chinese banks are being encouraged to seek such partnerships to help build up their capital and improve management. Reports said the memorandum with ICBC calls for Goldman Sachs to invest between $1.7 billion and $1.8 billion; Allianz would pay about $1 billion, while American Express would buy up to $300 million worth of shares. Earlier this month, the Royal Bank of Scotland Group PLC announced a $3.1 billion investment that will give the British bank control of a 10 percent stake in the Bank of China.

The Bank has been investigated by the United States in its money laundering probe related to the superdollars affair. http://english.chosun.com/w21data/html/news/200509/200509080007.html

Events in 2006

• It listed the largest IPO in the world since 2000 in 2006, and the fourth largest IPO in the world ever, on the Hong Kong Stock Exchange on June 1, 2006, raising some US$9.7 billion in the H-share Global Offering. The Over-Allotment Option was then exercised on June 7, 2006, raising the total value of their IPO to US$11.2 billion. http://news.xinhuanet.com/english/2006-06/01/content_4632335_2.htm
• It is due to make the largest IPO in mainland China by July 5, 2006, by offering up to 10 billion A-shares on the Shanghai A Stock Exchange, or up to RMB20 billion. These will be priced on June 22 (estimated to be around RMB3.00 each). It is estimated that about 52% of this IPO will be offered to institutional investors, with the rest for retail buyers.

References