Recruiting in China

CHINA Citic Bank Corp may raise as much as US$5.7 billion in a simultaneous Hong Kong and Shanghai initial public offering, the world's largest stock sale so far this year, three sources said.

The Beijing-based bank plans to offer 2.3 billion new shares in Shanghai at 4.66 yuan to 6.1 yuan to raise up to 14.03 billion yuan (US$1.82 billion), the people said. The company may raise a further HK$30.17 billion (US$3.86 billion) selling 4.89 billion shares in Hong Kong at HK$4.72 to HK$6.17, they said.

Mainland banks and insurers have sold US$61.1 billion of shares in Hong Kong and Shanghai since June 2005, when Bank of Communications Co became the first domestic bank to go public in Hong Kong. They have been encouraged by high valuations as investors seek to benefit from China's rapid economic growth, said Bloomberg News.

"This is not a bargain price" for stock in China's eighth-largest bank by assets, said Wu Xuan, a Shenzhen-based analyst at Penghua Fund Management Co. It "leaves little room for future upside gains if it's priced at the top end."

At the upper end, Citic Bank's sale could be the world's largest stock sale so far this year, according to data compiled by Bloomberg. It could trump a US$5.5 billion closed-end fund launch in the United States and a secondary share sale by Ping An Insurance (Group) Co, China's No. 2 insurer, which raised slightly more than US$5 billion in February.

The price ranges value Citic Bank at 2.48 times to 2.81 times its estimated book value this year, according to the three people, who declined to be identified before an official statement. The price ranges have yet to be approved by the China Securities Regulatory Commission.

The new shares to be listed in Shanghai represent a six percent stake in the bank, while those in Hong Kong are equivalent to 12.8 percent. The stock may start trading on April 27, Citic Bank said.

China International Capital Corp, Citigroup Inc, Citic Securities Co, HSBC Holdings Plc and Lehman Brothers Holdings Inc are arranging the sale.

China has the most expensive bank stocks in Asia's emerging markets, trading at about 3.2 times estimated book value in 2007, compared with 1.7 times for peers in India and 1.4 times for Korea, according to a Morgan Stanley report.

The Industrial & Commercial Bank of China Ltd, the nation's largest, traded at 2.79 times the consensus book value estimate for 2007 in Hong Kong, higher than 1.7 times for HSBC and 1.94 times for Citigroup.

Citic Bank was China's seventh-largest by total assets at the end of 2005, according to a preliminary share sale document. The company fell to eighth last month after the Postal Savings Bank of China was established.

Profit this year was expected to gain 53 percent to 5.69 billion yuan, according to an April 4 statement.

The company may achieve loan growth of 20 to 21 percent this year and in 2008, according to Bear Stearns Asia Ltd analysts.