China banks poised to go on sale
(AP)
Updated: 2005-10-20 07:15

"For us, the most important change will be the transition from a government structure to a completely commercialized operation ... the operating mechanism will become more transparent after the IPO. That will be beneficial to our clients," he said.

U.S. Securities and Exchange Commission Chairman Christopher Cox created a stir earlier this week when he told a Hong Kong newspaper that CCB didn't list on the New York Stock Exchange because "it couldn't meet the NYSE regulatory requirements."

According to the interview with the South China Morning Post on Monday, Cox expressed concerns about the bank's balance sheet, its management and the quality of its loans.

CCB spokesman Chai Xiang on Wednesday called Cox's statements "inappropriate and extremely irresponsible." The bank said in a statement has been audited by outsiders and its financial reports met international accounting standards — but did not directly address Cox's contention that it couldn't meet NYSE listing standards.

A spokesman for the New York Stock Exchange declined to comment on the matter, saying it was the Big Board's policy not to comment on companies not listed on the exchange.

China's regulators have successfully encouraged foreign banks to take strategic stakes in CCB and other banks as China prepares to fully open its banking sector to foreign competition by the end of 2006, according to the terms of its entry to the World Trade Organization in 2001. However, authorities have capped total foreign holdings in any single bank at 25 percent to ensure the state keeps control.

Bank of America has invested $2.5 billion in CCB and will spend another $500 million to keep its stake at 9 percent.

The billions of dollars raised through overseas share offerings are crucial, but analysts say the banks' exposure to outside investors and international standards for accounting, management and financial disclosure may be even more important.

"Regulators can't regulate the banking sector by themselves," Green says. "They need the market."