China's BoCom plans Shanghai IPO in H1 2007

SHANGHAI, Jan 5 (Reuters) China's Bank of Communications , the country's fifth-largest lender, aims to sell probably up to US.2 billion worth of shares in Shanghai in the first half of the year if shareholders approve its listing plan, industry sources said on Friday.

The bank's board has already approved the plan to sell up to 4.5 billion domestic A-shares, and shareholders will vote on the domestic initial public offering proposal in Shanghai on Tuesday, the sources told Reuters.

Bank of Communications' Hong Kong listed shares closed at HK.97 on Friday, valuing a similarly priced A-share listing as high as HK.4 billion (US.2 billion), although analysts usually expect some discount to the H-shares.

''After the bank wins shareholders' approval, it will quickly apply to Chinese regulators to list,'' said one banking source in Shanghai. ''The bank plans to launch the Shanghai IPO within the first half ... under the current market situation, it should be no problem.'' Bank of Communications has hired domestic securities houses CITIC Securities , Galaxy Securities and Haitong Securities to help underwrite the offering, said another source.

A spokeswoman for Bank of Communications said shareholder votes will be announced on Tuesday but declined to comment further on its Shanghai listing plans.

HSBC Holdings Plc. holds nearly 20 percent of the Shanghai-based bank.

HSBC Chief Executive Michael Geoghegan said in November that the British bank would maintain its 19.9 percent stake in Bank of Communications, which operates 2,600 branches nationwide, after the Chinese lender floated shares in Shanghai.

HSBC has helped Bank of Communications to issue co-branded credit card and the two banks are also cooporating in areas including wealth management, targeting the emerging middle-class in the world's fourth-largest economy.

Bank of Communications posted a 40 percent rise in its third-quarter net profit in November. At the same time, the rapid growth of its business caused its capital adequacy ratio, a measure of its financial strength in relation to the size of its activities, to edge down 0.11 percentage point to 11.09 percent.

On Thursday, the China Securuities Regulatory Commission said it will review the Shanghai IPO application of mid-sized Industrial Bank, partly owned by Hang Seng Bank , next Monday.

Nanjing City Commercial Bank, which counts France's BNP Paribas as an investor, is also in the queue for a Shanghai IPO approval, industry sources said.

Initial public offerings on Shanghai's stock market are expected to total nearly US billion in 2007 and overtake Hong Kong as Asia's biggest IPO centre, according to international auditing firm Ernst&Young [ERNY.UL].

Activity will be driven by mainland companies already listed in Hong Kong selling domestic shares and a group of second-tier bank IPOs, Ernst&Young said.

REUTERS DKS VV1727