ABC dismisses talk of IPO postponement

Agricultural Bank of China has dismissed as “nonsense” claims that its major government backers want the lender to postpone its initial public offering due to weak market conditions, Reuters reported. ABC Vice President Pan Gongsheng stressed that “many potential investors have expressed great interest” in the deal. The South China Morning Post and some local news sources have reported that the Ministry of Finance and Central Huijin favor a delay, while ABC Chairman Xiang Junbo is determined to proceed as scheduled. Fund managers are already concerned about the state of China’s banks, with listed lenders planning to issue US$70 billion in debt and new equity following record credit expansion in 2009. Chris Ruffle, a portfolio manager at Martin Currie, said that ABC would need to sell its shares at a 20% discount to its cheapest rival. Bank of China (601988.SH, 3988.HK) closed at HK$3.82 on Tuesday, representing 1.5 times book value. This means ABC would have to sell stock at 1.2 times book value.