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Bank of China Was Successfully Listed in Hong Kong and Opened a New Chapter in Its One-Hundred-Year History (2006)


 

Bank of China made fruitful effort in its shareholding reform through correct deployment and steady progression. The establishment of Bank of China Limited, the introduction of strategic investors, the enhancement of internal management, the deepening of internal reform as well as the transformation of operational mechanism combined to lay a sound foundation for the listing of Bank of China.

On May 11, 2006, the international road show for Bank of China's IPO kicked off in Shangri-La Hotel, Hong Kong, with the net amount of raised funds estimated to be HKD 68.071 billion. Subsequently, the management team of Bank of China continued with the international road show separately in financial centers of Asia, Europe and America. The IPO was proven as a great success. The raised fund of HKD 75.427 billion set a record of the world largest issue for the past six years. 76-times oversubscription was fulfilled in the public offerings and the frozen capital reached HKD 291.5 billion. The stocks of Bank of China were subscribed by nearly one million people in Hong Kong, that is to say, one out of six Hong Kong adults above the age of 18 subscribed for the stocks of Bank of China, breaking the historical record set in the year of 2000 when 600,000 people subscribed for MTR stocks.

On June 1, 2006, H-shares of Bank of China Limited were listed on the Stock Exchange of Hong Kong Limited. The raised funds of more than HKD 75.4 billion made this IPO the largest stock issue among Chinese companies, or Asia's largest stock issue except in Japan, or the largest stock issue in the global financial industry, and the fourth largest IPO ever seen in the world. On the first day when Bank of China (3988) was listed, the trading volume hit more than HKD 20 billion, higher than the highest trading volume of any stock on the first day of trading.


Successful Listing of H-Shares of Bank of China Limited on June 1, 2006

Within one month after successful listing on Hong Kong Stock Exchange, Bank of China finished the issue inquiry for A-shares, successfully listed on Mainland market as well. The A-shares were enthusiastically subscribed on the capital market, with the offline placement attracting 169 subscribers representing RMB 128.148 billion of lockup capital at 20 times of oversubscription. The frozen amount of online subscription hit RMB 548.9 billion or so at a lot winning rate of 1.94%. The combined online and offline frozen amount exceeded RMB 660 billion, making the offering the largest one on the A-share market.

On July 5, 2006, A-shares of Bank of China Limited were listed on Shanghai Stock Exchange. At 9:25, Xiao Gang, Chairman, and Li Lihui, President of Bank of China jointly beat a gong to signify the commencement of trading. Bank of China was the first major state-owned commercial bank that was listed on A-share market. The opening price of Bank of China (SSE Code: 601988) A-shares was RMB 3.99, increased by 29.55% compared with the issue price of RMB 3.08. The total issuance of 6.49 billion A-shares set up a new record of the largest domestic IPO. After the IPO, the total share capital of Bank of China reached RMB 253.8 billion, including 177.8 billion A-shares representing market capitalization of RMB 673.86 billion, which was larger than the total market capitalization on Shenzhen Stock Exchange, making Bank of China Limited the most valuable listed company among all stocks on both Shanghai Stock Exchange and Shenzhen Stock Exchange.


Chairman Xiao Gang and President Li Lihui of Bank of China jointly beat a gong to signify the commencement of trading of A-shares

Bank of China became the first domestic company that was listed both on H-share and A-share markets. As the domestic listed company with the largest IPO, largest market capitalization and most negotiable shares, Bank of China took an overall listing approach rather than spin off any assets to be listed, thus setting up a successful example for the pilot transformation of state-owned banks. As overall listing would not produce any other surviving company, it was conducive to the establishment of a sound governance mechanism and the unified operation of Bank of China brand for stronger international competitiveness. This approach not only met the needs of Bank of China for financial reform, opening-up and development, but satisfied the needs of the optimization of its own corporate governance structure and the diversification of equity investment. More importantly, it met the needs of maximizing the interests of shareholders.

After long-term development, Bank of China initially established the pattern in which commercial banking, investment banking and insurance would be developed simultaneously, thus proving a more competitive platform for future development. The successful listing of Bank of China on Hong Kong Stock Exchange and Shanghai Stock Exchange marked a new milestone in its century-long history particularly important for the development of Bank of China in the long run, and an initial success of the shareholding reform on the capital market and the joint stock reform of state-owned commercial banks.

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