UPDATE 1-China AgBank launches joint stock structure

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BEIJING, Jan 9 (Reuters) - Agricultural Bank of China [ABC.UL] has completed its conversion into a joint stock company, the bank said on Friday, marking another step in the state bank’s transformation along commercial lines.

China’s Finance Ministry and Central Huijin, an arm of the country’s sovereign wealth fund, each hold 50 percent of the newly established firm, Agricultural Bank of China Co Ltd.

The firm has registered capital of 260 billion yuan ($38 billion), the bank said in a statement on its website (

The transformation marks a milestone in Beijing’s lengthy process of overhauling its state lenders into commercially focused institutions, which has so far cost the government as much as $500 billion.

The bank did not give the names of the newly elected management team, but sources familiar with the situation told Reuters that Xiang Junbo, former governor of AgBank, was appointed as its chairman.

Former AgBank vice governor Zhang Yun was appointed governor of the joint-stock firm, the sources said.

AgBank received a $19 billion capital injection from Central Huijin in November to begin cleaning up its books, burdened by its legacy as a provider of politically driven credit to farmers and rural enterprises.

Also in November, it hived off $111 billion yuan of bad loans, transferring them to an asset management company.

AgBank, China’s third-largest lender by assets, has said it would be technically ready for an initial public offering by the second half of this year, but market conditions might force a postponement until 2010.

Beijing wants the bank to retain a focus on supporting the countryside, which is home to about 750 million of China’s 1.3 billion people.

The reform of AgBank follows the model applied first to China Construction Bank 0939.HK601939.SS and Bank of China 3988.HK601988.SS in 2003, and then Industrial and Commercial Bank of China 601398.SS1398.HK in 2005. (Reporting by Langi Chiang and Jerry Hua, Editing by Jacqueline Wong)