China's Huaxia bank set to list

By Nic Hopkins
CNN.com Writer

HONG KONG, China (CNN) -- Second-tier Chinese finance house Huaxia Bank plans to list on the domestic share markets after China joins the World Trade Organization.

The Financial Times newspaper reports that Huaxia has planned a share market float for the middle of this year to help fund its fight against an expected jump in competition from non-Chinese banks once China joins the WTO.

The FT's Internet site quotes Huaxia Bank president Duan Xiaoxing as saying the bank feels "tremendous pressure" from the likely encroachment on Chinese soil of offshore rivals.

Subject to approval from securities regulators, Huaxia will issue about 400 million class A shares valued at about Rmb4 billion ($483 million). It will be the fourth bank to list on the Chinese share market.

Funds for online banking, offshore presence

The FT says the funds raised will be used to bolster the bank's financial position, as well as help it establish an online banking presence and expand its network of branches in China and overseas.

Quoting company executives, the newspaper says Huaxia has total assets of Rmb95.3 billion ($11.5 billion) and booked a profit in 2000 of Rmb720 million ($87 million), up 40 percent on its result in 1999.

Duan says that offshore banks have a distinct technological advantage of domestic Chinese banks, meaning they will not need to spend much on local infrastructure as they begin to trade with Chinese companies two years after China's expected entry into the WTO.

They will be able to start trading at a retail level by about 2005.

Foreign banks enjoy advanced technology

"Foreign banks have advanced technology. They do not need a lot of branches and sub-branches to compete. They can use computer networking to gain clients," Duan is quoted saying by the FT.com.

He says he expects to spend about Rmb200 million ($24 million) just to develop online banking services in consultation with the Hong Kong-based Bank of East Asia.

Huaxia will spend another Rmb100 million ($12 million) to build a network of 100 automatic teller machines.

The FT says that as part of the response to the expected intensification of competition, Huaxia has co-operation agreements with overseas banks, including the Bank of East Asia, Standard Chartered Bank and CITIC Ka Wah Bank in Hong Kong.

China embarks on historic, difficult market transformation

Huaxia Bank

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.