UPDATE 2-Everbright eyes IPO price range of 3-3.3 yuan -source

* Everbright to submit range to regulator for approval-source

* Range represents 1.54 to 1.7 times p/b -report

* Everbright will potentially raise up to $2.97 bln

By Samuel Shen and Jason Subler

SHANGHAI, Aug 6 (Reuters) - China Everbright Bank, looking to raise around $3 billion in its Shanghai IPO, has put its preliminary IPO price at a modest 3.0-3.3 yuan ($0.44-$0.49) per share range, setting the stage for a strong reception for what could be China's second-biggest offering this year.

Everbright's initial public offering of almost 6.1 billion shares is expected to face a much warmer welcome than the mega-IPO launched by the Agricultural Bank of China (601288.SS)(1288.HK) just a month ago, helped by better market conditions.

"The price range is lower than we expected, which is good for the stock performance after listing," said He Sheng, head of research at Western Securities in Shanghai.

"Everbright Bank is weaker than other mid-sized lenders in terms of asset quality and profitability, but that leaves room for improvement, making the IPO attractive."

A strong performance by Everbright will bode well for other fundraisings in the pipeline, particularly for banks.

China's No.11 bank is joining other Chinese lenders in a rush for cash after they lent a record 9.6 trillion yuan ($1.4 trillion) last year to support Beijing's economic stimulus and as the banking regulator tightened capital rules to pre-empt a rise in bad loans.

Bigger rivals Bank of China (601988.SS)(3988.HK), China Construction Bank (0939.HK)(601939.SS) and Industrial and Commercial Bank of China Ltd (1398.HK)(601398.SS) are collectively looking to raise tens of billions of dollars to replenish their capital in coming months.

Everbright's range, confirmed to Reuters by a source with direct knowledge of the fundraising, was reported by the official China Securities Journal earlier on Friday.

The state-run Securities Journal said the range represented 1.54 to 1.7 times Everbright's forecast 2010 book value, enabling it to raise as much as 20.1 billion yuan ($2.97 billion) before an overallotment of shares.

Mid-sized rival China Merchants Bank (600036.SS) trades at 2 times book value, compared with 1.4 times for Huaxia Bank Co (600015.SS) and 1.3 times for China Minsheng Banking Corp (600016.SS).

Key investors have heavily oversubscribed for their portion of the Everbright IPO, signalling strong interest. Thirty strategic investors committed up to 60 billion yuan for the as many as 3 billion shares on offer to them, making the share placement nearly 7 times oversubscribed. [ID:nTOE67302A]

Everbright is conducting its IPO in market conditions that are significantly different from those just a month ago, when AgBank raised more than $20 billion.

The Shanghai Composite Index .SSEC has rebounded about 12 percent from a low hit in July. The weak market sentiment at the time, due in part to the sheer size of AgBank's fundraising, contributed to its relatively cool welcome on markets.

Still, Everbright's conservative range points to investor concerns over banks' asset quality, analysts said. Investors are especially worried after China's banking regulator instructed lenders to test the impact of the sharp fall in housing prices in key cities. Also at risk are bank loans to government infrastructure projects. [ID:nTOE66P032] [ID:nLDE67400F]

POET AT THE HELM

Everbright Bank, controlled by Central Huijin, a unit of China's $300 billion sovereign wealth fund, plans to sell 6.1 billion yuan-denominated A shares, and could expand its IPO by 15 percent to 7 billion shares through an overallotment.

The bank's chairman, Tang Shuangning, a former vice chairman of the China Banking Regulatory Commission and a well-known calligrapher, had said the strategic placement and the over-allotment option were designed to limit any negative impact that the IPO could have on the stock market.

Tang, who was appointed chairman in 2007, once described himself to local media as "a master of poetry and calligraphy, with only a slight understanding of finance."

Everbright operates 483 branches across the country and had assets of about 1.2 trillion yuan as of end-2009. It said on Thursday that it aims to double its profit in two years. [ID:nTOE67406I]

Its second-biggest shareholder is China Everbright Group, one of China's biggest financial conglomerates with businesses ranging from banking, insurance, asset management and securities to real estate.

The bank this week completed its premarketing to investors, and is expected to formally announce the price range on Monday. The bank aims to list on the Shanghai Stock Exchange on Aug. 18. (Additional reporting by Soo Ai Peng; Editing by Valerie Lee) ($1=6.77 Yuan)