Bank of China has been approved to raise up to US$2.5 billion in a domestic initial public offering within six months, the South China Morning Post reported, citing sources. The board of the mainland's second-largest financial institution has approved the sale of up to 10 million A shares, but it was thought the deal would be much smaller. "They've just reopened the domestic markets to IPOs and there's no way one of the first deals out is going to be that huge, especially since the largest deal to date is only US$1.4 billion," a source said. Beijing pulled the plug on domestic listings last May as it sought to remove an overhang of government-owned shares accounting for more than two-thirds of market capitalization as stocks stumbled to a seven-year low. The Shanghai Composite Index has risen 33% this year and the Shenzhen index is up 37% and the government is now looking for blue-chip firms to sell shares.