Jiangyin Bank plans Shanghai IPO next year-sources

SHANGHAI Aug 11 (Reuters) - China's Jiangsu Jiangyin Rural Commercial Bank plans to raise several billion yuan (several hundred million U.S. dollars) in an initial public offering in Shanghai next year to fund expansion, two people with direct knowledge of the plan said on Tuesday.

Jiangyin Bank, based in eastern China's Jiangsu province, submitted an IPO application late last year and is waiting for regulatory approval.

Everbright Securities Co is arranging the share sale, said the people, who declined to be identified because they were not authorised to speak to the media.

Jiangyin Bank is vying with Shanghai Rural Commercial Bank, partly owned by Australia & New Zealand Banking Group (ANZ.AX), to become China's first listed rural lender.

Foreign lenders including HSBC Holdings Plc (HSBA.L), Citigroup Inc (C.N) and Standard Chartered Bank (STAN.L) have set up rural financial institutions in China as the government encourages rural financing to help farmers and small businesses.

"In places like Jiangyin the rural economy is vibrant, with many small businesses that are growing rapidly," said Liu Jun, an analyst at Changjiang Securities Co. "Rural lenders have the potential to compete directly with city lenders as they grow bigger." Going public could also help Jiangyin Bank to expand through acquisitions. The lender last year bought a 10 percent stake in Jinjiang Rural Cooperative, and owns a controlling stake in two rural lenders in western China's Sichuan province.

Jiangyin Bank was formed in 2001 as part of China's financial reforms in the countryside aimed at narrowing the wealth gap between urban and rural areas.

The lender, with 30 branches and 67 smaller outlets, extends loans mainly to small businesses and high-tech firms, according to its website.

Jiangyin Bank's net profit rose 20 percent in 2008 to 598 million yuan ($87 million) on revenue that increased 39 percent to 1.36 billion yuan, as the global economic slowdown created hardships for the many exporters among its clients and its margins shrank. The bank had total assets of 32 billion yuan at the end of last year. (US$1=6.832 Yuan) (Reporting by Samuel Shen and Edmund Klamann; Editing by Jacqueline Wong)