4 billion of securities at the price of 3

Beijing held his bet. Convinced that the passion of the investors for the Chinese growth would outweigh the economic reason long, the Communist Government was able to push one of its banks deemed virtually insolvent even three years to complete the greatest introduction ever attempted stock in the world. Agricultural Bank of China (ABC), which will confirm that tomorrow the exact price of its dual introduction on the stock market, was left yesterday, the Chinese press revealed that he planned to raise up to $ 22.1 billion and should thus exceed the 21.9 billion raised by ICBC, another Chinese Bank, its opening in October 2006.

The third largest bank in the country, in effect, sold 25.4 billion of securities at the price of 3.20 Hong Kong dollars per share on the place of Hong Kong and flowed at the same time, 22.24 billion category titles priced at 2.68 Yuan per action in Shanghai. If, as a first step, these two introductions will enable the group to win $ 19.2 billion, likely engagement of Overallotment options should be allowed to retrieve additional $ 2.9 billion. "The central Government is all that this introduction is a success," summarized yesterday, Francis Lun, one of the leaders of Fulbright Securities.

Before dare this delicate operation, the Communist power had taken the time to extensively "reinventing" the policy Bank created in 1951 by Mao to support the development of campaigns. After having contemplated in 2006 a dismantling of the group, destabilized by the spectacular amount of its bad debt - they then accounted for more than 25 of the assets of the Bank-, Beijing had withdrawn 816 billion yuan (120 billion dollars) of rotten loans of the Mastodon accounts for transfer to a hiving-off company, before can borrow itin 2008, an injection of fresh capital $ 19 billion. "The idea was to put some lipstick on a pig", smile, in private, the analysts, who doubt the reality of the transformation of the banking group.

Doubtful accounts

Officially, ABC were more in its accounts that 2.9 of doubtful end of 2009. This amount, Charlene Chu, an analyst for Fitch Ratings, wishes to add credits with a "special mention" and covering loans whose holders are theoretically solvent but whose payments seem to be "complicated" to get... These special loans already accounted for 12.8 of the assets of ABC end of 2008, before even the flight of credits in 2009, related to the orders of revival of the Communist Party, wrote Charlene Chu in a recent report to its customers.

With a vast network of 24.064 agencies, the management of the Bank, often linked to local political authorities, could not, despite his oaths of good governance, control the quality of credits transferred in recent months and could be confronted in the medium term a new explosion of its bad loans. If this degradation will not be in question the existence of ABC, it will likely weigh on the performance of the institution, which, bad reputation and its strong presence in so-called "rural", already struggling to attract more paying customers of the country.

Apparently little upset by these handicaps, the buyers institutional and individuals rushed titles of ABC and several major foreign groups, such as Standard Chartered Bank or Rabobank, held even a part of the investors of reference. Facing the West's economic difficulties and gloom of the major international markets, all seem to be called "magical" progressions of titles of ICBC and Bank of China. "They have a long term view and see in Agricultural Bank of China Chinese a way to take advantage of the regularity of growth", summed up, a few days ago, Yu Wei, Guoyuan Securities.