Breaking China

24 May 2006 By Mike Verdin

The Swiss bank may seem to have a bit of a me too strategy, taking small stakes in the Bank of China and a Beijing brokerage. But it s actually trying to build goodwill in Beijing so it can take advantage of the opening up of the Chinese wealth management market.

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Bank of China, China's second largest bank by assets, has priced its shares at HK$2.95, near the top of the IPO range of HK$2.503.00. The float values the bank at about HK$720bn (US$93bn), or 2.2 times book value. The bank has yet to decide on an overallotment option.

The IPO values Royal Bank of Scotland's BoC stake, bought last August, for $1.6bn, at about $4.2bn. UBS's 1.6% stake, purchased for $500m in September, is worth nearly 1.3bn.

BoC will use the HK$75bn ($US9.7bn) raised by the float, of 25.6bn new shares, to strengthen its capital base and support growth.

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