China to set high bar for IPOs by smaller banks -paper

SHANGHAI, April 27 Thu Apr 26, 2012 9:55pm EDT

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SHANGHAI, April 27 (Reuters) - China's securities regulator is planning to enact strict criteria that small and medium-sized commercial banks must meet to list publicly, seeking to allow only one in five to go public over the next few years, state media said on Friday.

The China Securities Regulatory Commission (CSRC) has drafted the standards and is in the process of soliciting views from the banking regulator and other departments, the official Shanghai Securities News said.

In China's regulatory regime, new rules such as these are basically finalised before the drafts are released, meaning the final version is usually very similar. Official financial newspapers are often a channel regulators use to initially float such plans to the financial community.

Small and medium-sized banks seeking to list need to meet stringent criteria, the paper said, such as having one-year return on assets and return on capital that is higher than the banking industry average and an average provision coverage ratio higher than the banking industry average.

There are currently 191 small and medium-sized banks in China, more than 40 of which have previously expressed an interest to list, close to the regulator's target of 20 percent, the paper said.

City commercial banks that have submitted listing proposals include the Bank of Hangzhou, Bank of Shanghai and Bank of Chongqing Co, while the CSRC has already begun to vet the listing proposals of four other farming co-operatives.

Bank of China, the country's No.3 lender by market value, posted a near 10 percent rise in first-quarter net profit on Thursday but the figure fell below expectations as flat net interest margins offset a rise in fee income. (Reporting by Melanie Lee and Fayen Wong; Editing by Eric Meijer)

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