Banking

ABC IPO lifts core CAR, challenges remain: Moody's

(Agencies)
Updated: 2010-07-12 14:22

Core capital adequacy ratio of Agricultural Bank of China(ABC) is expected to rise beyond 10 percent after collecting more than $22 billion via a dual listing later this week, Moody's said in a report on Monday.

Special Coverage: Focus on ABC's IPO Plan Related readings:  Market's rebound to be put to the test  ABC sets H-share IPO price at HK$3.2  ABC may raise $22b in record IPO  ABC to exercise greenshoe option for Shanghai shares

Funds raised via its potential record-breaking initial public offering will boost the bank's balance sheet, which had a core capital adequacy ratio of 7.74 at the end of 2009, said Yi Zhang, vice president and senior analyst at Moody's.

The rating agency last week upgraded ABC's stand-alone bank financial strength rating to D- from E+, citing pressure on the bank to improve its disclosure and increase its accountability after becoming public.

"ABC is uniquely positioned to benefit from China's efforts to urbanise the country and increase the income level of the rural population, because its traditional strength is a vast and unparalleled branch network in China," Zhang said.

After the massive fundraising, Beijing-based ABC, which has more than 320 million customers, still faces challenges in how to bank on its vast network and concerns about its non-performing loans.

ABC is scheduled to start share trade in a Shanghai debut on Thursday and a day later in Hong Kong.