The bank has decided to return to the yuan-denominated A-share market as its businesses and clients are mostly on the mainland, reported Wednesday's Shanghai Securities News.

By issuing A-shares, the Shanghai-based bank will replenish its core capital, strengthen corporate governance and enjoy a "new platform for capital raising", said Jiang Chaoliang, board chairman of BoCom.

Goldman Sachs, Gao Hua Securities, China Galaxy Securities, CITIC Securities and Haitong Securities have been chosen as underwriters and the initial public offering (IPO) will begin in the second quarter of this year, raising 20 billion yuan (US$2.56 billion), said a source close to the bank.

BoCom also plans to issue subordinated bonds, worth a total of 25 billion yuan and with terms of at least 10 years, in the hope of replenishing its supplementary capital and improving its capital adequacy.

However, the bank has said its planned issue of A-shares and subordinated bonds is subject to the approval of the China Securities Regulatory Commission, the country's securities market watchdog.

The bank's capital adequacy ratio (CAR), the measure of its own capital in proportion to its outstanding loans, declined to 11.09 percent in September 2006 from 11.2 percent at the end of 2005, according to the bank's report for the third quarter last year.

As a strategic investor, the Hongkong and Shanghai Banking Corp, currently possessing a 19.9 percent stake in the bank, may expand investment to maintain its stake once A-shares are issued, said analysts.

BoCom, established in 1908, became China's first joint-stock commercial bank in 1987 and listed on the Hong Kong stock market in 2005. The bank had 1.4 trillion yuan in assets at the end of 2005, with after-tax profits reaching 9.25 billion yuan in the year.

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