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Agricultural Bank deny breakup plans

(AP)
Updated: 2006-05-24 15:52

China's central bank and the state-owned Agricultural Bank of China are denying a report that the government plans to break up the huge bank.

There are several reform options, but "offering shares in the entire bank is the most rational choice and the most pragmatic," the official Xinhua News Agency on Wednesday quoted Li Zhicheng, chief of the bank's research office, as saying.

A newspaper reported Monday that the central bank had recommended to China's Cabinet breaking up the bank, the mainland's fourth largest state-owned commercial banks, into a series of provincial banks.

Central bank Governor Zhou Xiaochuan, asked Tuesday at a financial conference whether he made that proposal, said "there's no such thing,".

The Agricultural Bank has lagged behind other major Chinese commercial banks, which have received government injections of new capital and been allowed to link up with foreign partners in preparation for raising money on foreign stock exchanges.

By contrast, the Agricultural Bank is the only one of the "Big Four" state-owned banks that hasn't been restructured into a corporate entity with shareholders.

The bank said last week its 2005 net profit fell 48 percent to just over 1 billion yuan (US$125 million), down from about 2 billion yuan (US$250 million) the previous year.

The bank is still carrying billions of dollars in unpaid loans to state companies, which it says accounted for 26 percent of its lending at the end of last year.