China bank PSBC launches $8.1 bn IPO: reports


HONG KONG: Postal Savings Bank of China (PSBC) launched an initial public offering in Hong Kong worth $8.1 billion on Tuesday, reports said, in what is expected to be the world’s biggest flotation this year.

The Beijing-based lender is offering 12.1 billion shares at HK$4.68 to HK$5.18 each, according to Bloomberg, which said cornerstone investors would buy the majority of the stock.

The listing is expected be the biggest since that of Chinese Internet giant Alibaba in New York in 2014, which raised $25 billion.

PSBC is China’s fifth-largest lender with 40,000 branches — more than any other bank in the country — and around 70 percent in rural areas.

Founded in 2007, it provides basic banking services to farmers and agricultural business owners, and it is the only financial institution present in some of the country’s most remote regions.

According to the latest figures, PSBC’s total assets reached 7.7 trillion yuan by March. Its net profit rose 11 percent year-on-year in the first quarter to 12.48 billion yuan.

“PSBC’s earnings indicators such as profit and non-performing loan (NPL) ratios are better than other commercial banks in China,” Dong Ximiao, senior economist and visiting fellow at Renmin University of China, told AFP.

But he added that the bank’s low NPL ratios were due to it lending less, weakening its earnings capacity.

“The bank is trying to transform into a modern commercial bank using funds raised from the offering. But the task will be a challenging one,” he said.

Previously completely state-owned, PSBC raised 45.1 billion yuan ($7 billion) by selling a 16.92 percent stake to 10 strategic investors in December, valuing the firm at $40.6 billion.

Among the buyers were e-commerce giant Alibaba’s affiliate Ant Financial and Tencent, another internet behemoth.