The Asian Development Bank said it had signed a deal to invest $ 75 m for an unspecified equity stake in Bank of China,to help the lender " enhance corporate governmence and control system " ahead of an initial public offering in the first half of 2006.
The transaction will be the largest equity transaction by the ADB's private sector unit in China to date,the Manila-based bank said.It described the deal as a crucial step in reforming China's commercial banking sector.
BoC,with more than 11.000 branches in 27 countries,was one of the first state-owned banks to be restructured into a joint stock company as Beijing prepared its banking system for competition from foreign banks under its commitments to the World Trade Organization.
"The restructuring of this leading state-owned bank will serve as a model for reforming and restructuring other financial institutions in ( CHina's) financial sector."said RObert Bestani,director-general of the ADB's private sector operations department.
The entry of the ADB and other foreign investors in BoC,which has been hit by scandals and internal fraud,is expected to help the bank improve management accountability and risk management.
Temasek,the Singapore state investment group,UBS of Switzerland and Royal Bank of Scotland are also buying equity stake sin BoC.
"The investment offers the checks and balances of a multilateral development bank to Bo C's restructuring process " said William Willms,an ADB principal investment officer.Established in1921,BoC is one of China's foremost foreign exchange banks,and offers a wide range of commercial,retail and investment banking services.
The ADB,which has programme loans for China averaging $ 1.5 bn a year between 2006 and 2008,previously invested $ 20 m in China Everbright Bank in 1996.It also acquired a 10 percent
stake in Xiamen International Bank.
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The ADB also announced the launch of its debut renminbi-denominated bonds in China's domestic capital market.The issue,which will be lead managed by BoC International (China),
aims to raise Rmb 1 bn ( $ 1245 m ) with a bullet maturity of 10 years and a fixed coupon rate payable annually.
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