Due to its huge bad loans caused by massive unprofitable lending to the agricultural sector, the bailout may cost US$100 billion, much more than that of the other three major State-owned commercial banks, Xinhua News Agency reported earlier, citing an official from the Central Huijin Investment Co.

A worker puts the finishing touches to an Agricultural Bank of China ATM booth in Shanghai. The bank may get a government cash injection next year. [BLOOMBERG NEWS]

Last year, as much as 26.2 per cent of the ABC's 2.8 trillion yuan (US$356 billion) loans were non-performing.

The Chinese Government has encouraged the nation's biggest banks to restructure and sell shares, so that adherence to international accounting, disclosure and capital adequacy standards can improve their competitiveness, in order to deal with challenges brought by the full opening of the financial market.

Reforms of Bank of China, China Construction Bank and the Industrial and Commercial Bank of China have already resulted in some progress, with their capital adequacy ratios reaching 12.4 per cent, 13.15 per cent and 10.74 per cent respectively by the end of June.

Meanwhile, their respective bad loan ratios dropped to 4.19 per cent, 3.51 per cent and 4.10 per cent by that time, according to Zhou's report.

But Zhou told legislators that further reform is required at the three lenders, stressing that they "should further improve corporate governance, deepen internal restructuring and speed up the reform of management mechanisms."

Meanwhile, in order to support the reform of financial institutions, the government will step up other related reforms, including reform of the taxation system for commercial banks, the establishment of a deposit insurance system, and the construction of a social credit system.

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