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December 11, 2007 |
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AGRICULTURAL BANK: May Write Off NPLs with Own Capital or Profit The Agricultural Bank of China will get rid of its non- performing loans in the same manner as other major state-owned banks did, AFX News Limited reports, citing the Shanghai Securities News. As reported by the press, Agricultural Bank is the only one of the “big four” state banks that remains unlisted. All the other three major state-owned banks -- the Industrial & Commercial Bank of China, Bank of China, and China Construction Bank -- either wrote off their NPLs with their own capital, profit and provisions or put them on auction before their initial public offers, AFX Limited recounts. Moreover, all three also received capital injections from the central government prior to their listing, the report adds. AFX mentions that earlier press reports indicated that China Central Huijin, the Chinese central bank's investment arm, will inject US$40 billion into Agricultural Bank ahead of its listing, and the central bank and the finance ministry will take over the task of disposing of its non-performing assets. According to the report, China Banking and Regulatory Commission's vice chairman, Jiang Dingzhi, said that factors particular to banking in rural areas should also be taken into account, without elaborating further. The bank said in August 2007 that its non-performing loan ratio as of June 30 fell 2.09 percentage points from the 23.43% reported at the end of 2006, the report adds. The exact number of NPLs in the bank is unknown yet, but independent analysts have estimated them at around US$100 billion, AFX relates. The Agricultural Bank of China -- http://www.abchina.com/en/hq/index.jsp/index.html -- is the mainland's fourth largest bank. It has lagged behind other major Chinese commercial banks, which have received government injections of new capital and been allowed to link up with foreign partners in preparation for raising money on foreign stock exchanges. Despite posting operating profits of over CNY42.4 billion in 2005, the Bank is still carrying billions of dollars in unpaid loans to state companies, which it says accounted for 26% of its lending at the end of 2006. According to XFN-Asia, at the end of September 2007, Agricultural Bank had outstanding loans of CNY3.44 trillion, of which 22.11% were bad loans. The Troubled Company Reporter-Asia Pacific reported on June 27, 2006, that the National Audit Office found accounting irregularities involving CNY51.6 billion, CNY14.27 billion of which come from deposit business, CNY27.62 billion from loan grants, and CNY9.72 billion from fraudulent bill issuance. Fitch Ratings gave the Bank an Individual rating 'E'. |
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