The US$1.9bn IPO on the Hong Kong market by the country's fifth-largest lender set a standard for China's banking reform, as other state banks are expected to follow suit in offering their shares overseas.
Largely because of the bad loans lurking in China's banking sector, BoCom's shares, priced between HK$1.95-HK$2.55, are offered at a discount to Hong Kong-traded banks, including HSBC Holdings Plc and Standard Chartered Plc.
BoCom's valuation may have spooked China Minsheng Banking Corp, which reportedly postponed meeting with investors in June ahead of its Hong Kong IPO in July. With Minsheng's valuation at about two times its estimated book value, compared with BoCom's 1.3 to 1.6 multiple, the non-state bank decided to pull back from testing the waters with investors, opting instead to observe how the market takes to BoCom's IPO and potentially delaying its US$800m offering.
Meanwhile, another IPO hopeful, China Construction Bank, continued to shop for foreign strategic investors. CCB, which plans to raise up to US$5bn in an IPO before year-end in one of the largest deals ever in Asia, has signed memoranda of understanding with potential investors, according to Liu Mingkang, chairman of the China Banking Regulatory Commission.
To bolster its image ahead of the offering, CCB removed the heads of two provincial branches it considered responsible for frauds committed at outlets under their watch, state media reported. The bank said it accepted the resignations of Liang Fucheng, president of the branch in Shanxi province and Sun Jiancheng, president of the branch in Hunan province. CCB has been on guard against wrongdoings since its former chairman, Zhang Enzhao, resigned earlier this year amid speculation of corruption.