ICBC 1398

[winston]

Easy come, easy go after China ICBC's gold glitch

BEIJING (Reuters) - A computer glitch at the Industrial and Commercial Bank of China (1398.HK) gave gold traders a 23-minute bonanza that cost the bank dearly last week, sparking a debate on Monday as the bank reclaimed the windfall.

ICBC, the world's biggest bank by market value, was left red-faced after its trading system went awry in the early hours of Friday, quoting a bid price for gold of 848 yuan per gram, nearly six times the going rate it had offered moment earlier.

Alert traders using the bank's online trading platform pounced on the bank's misfiring system and raked in easy profits, according to local media reports.

One lady in the western city of Xian made a tidy 126,540 yuan in a single minute, the Beijing Times said, estimating that the bank's total losses ran to 10 million yuan ($1.46 million).

The golden opportunity lasted for 23 minutes, between 01:52 a.m. and 2:15 a.m. local time, Caijing Magazine reported.

ICBC (601398.SS) spotted the error later in the day on Friday and froze all trades that had taken advantage of it, Caijing added.

On Saturday, the bank posted a statement on its website saying that prices on its gold trading system had "deviated seriously from the market price" for a short time.

It added that all sales and purchases executed during that window would be canceled in accordance with an agreement signed by users of the gold-trading platform.

"The gold trading system quickly returned to operating normally and ICBC is contacting related clients and explaining matters," the statement concluded.

The question on Monday was whether the bank was in the right.

Zhang Zhifeng, a lawyer at the Lanpeng Law Firm, told the Beijing News that ICBC had no legal basis in seizing the money since the clients had simply sold at the price quoted by the bank and had not intentionally cheated it.

Law scholar Wang Weiguo disagreed, telling Fazhi Wanbao, a legal affairs newspaper, that the windfall constituted "unjust enrichment" for the traders and had to be returned to the bank.

[winston]

DJ MARKET TALK: Goldman Removes ICBC From Conviction Buy List

1226 [Dow Jones] STOCK CALL: Goldman Sachs removes ICBC (1398.HK) from Conviction Buy list due to concerns of global macro and financial sector weakness and potential foreign strategic shareholders' stake sale risks on H-share banks.

But keeps at Buy on fundamental defensiveness, high dividend yields given consistent and conservative/low loan growth strategy, while strong capital base (11% tier I CAR) and large balance sheet should provide it with ability to gain market share by lending to lower risk infrastructure projects and big corporates. Keeps target at HK$4.20. Stock down 1.8% at HK$3.23; HSI down 1.8%

[winston]

Top China bank extended $37 bln loans in Jan

SHANGHAI, Feb 6 (Reuters) - The Industrial and Commercial Bank of China (601398.SS)(1398.HK), the country's top lender, said it extended 252 billion yuan ($37 billion) of new loans in January, state media reported on Friday.

Following a government appeal for banks to lend more to help stimulate economic growth, ICBC said it extended 117 billion yuan in direct loans and offered 135 billion yuan in discount business via commercial paper, the official Shanghai Securities News said, citing a company statement.

The bank's high proportion of lending via the much safer discount business, about 54-percent of the total, reflects banks' increasing attention to risks as they ramp up lending in response to the government's economic revivial plan.

A similar lending spree in mid-1990s, when China's economy was in a downward cycle, caused Chinese banks' ratio of non-performing loans to nearly double in a few years. That in turn forced the government to inject funds into major state-owned banks in the late 1990s and bail them out this decade.

State media said this week that Chinese banks were estimated to have extended a monthly record of 1.2 trillion yuan new loans in January.

Analysts have warned that China's large-scale credit surge, aimed at stimulating the world's third-largest economy, may result in another rise in sour loans for banks and in industrial overcapacity -- problems seen in the 1990s and in 2003 when the government also relaxed monetary policies to help boost the economy.

[winston]

ICBC talks to stakeholders by KATHERINE NG

Industrial and Commercial Bank of China (1398) - the world's largest lender by market capital - has touched base with its foreign shareholders to foster their allegiance as the date when they can offload their shares in the mainland lender draws nearer.

ICBC chairman Jiang Jianqing said he believes "not all" strategic investors will dispose of their holdings.

"If they offload their stakes, there will be no impact on our business," said Jiang yesterday on the sidelines of the National People's Congress in Beijing.

Strategic shareholders, including Goldman Sachs, Allianz Insurance and American Express, hold a combined 7.3 percent of ICBC and may sell their shares on April 28 at the earliest. The second date when their shares may be unlocked is October 20.

As the last mainland bank to have strategic investors' shares become tradable, ICBC faced selling pressure last month, plunging nearly 6 percent on February 17 when Goldman Sachs was rumored to be testing the market for placements.

Heeding the central bank's call, ICBC aims to raise its lending especially to small and medium-sized enterprises, expecting new loans to grow by 13 percent, according to Jiang.

New loans last month totaled more than 100 billion yuan (HK$113.39 billion).

[winston]

Goldman may trim ICBC stake

* Goldman, ICBC in talks on Goldman reducing stake: WSJ
* Cutting stake by 15-20% may raise about US$1 bln: WSJ
* Allianz, Amex expected to consider selldowns as lockup ends

HONG KONG - Goldman Sachs Group Inc and China's ICBC have been in discussions about the New York bank reducing its stake in the world's largest financial institution, according to a report on Tuesday.

Like other Western banks before it, Goldman has been expected to consider selling down part of its 4.9 per cent ownership of Industrial and Commercial Bank of China when the lock-up period ends at the end of next month.

That stake is worth around US$8.5 billion, based on ICBC's market capitalisation of about US$178 billion which makes it the world's biggest bank by that measure. The Wall Street Journal reported on Tuesday that a Goldman sell down could raise around US$1 billion for the bank by selling 15-20 per cent of its holding.

ICBC signed a deal in 2005 to sell a 10 per cent stake to a consortium that included Goldman, European insurer Allianz AG and American Express Co for more than US$3 billion.

Equity capital market bankers in Asia expect the other two members of the consortium to consider selling their stakes as well, as their lock-up periods also end at the end of next month.

ICBC's shares soared after the bank went public in 2006, nearly tripling in price by November 2007. But the global economic slowdown has taken its toll on the bank.

ICBC shares fell 1 per cent to HK$3.48 on Tuesday, not far above their IPO price of HK$3.07.

Major Western shareholders in other Chinese banks have also been trimming or selling their stakes to free up cash and help restore their battered balance sheets.

Bank of America raised US$2.83 billion in January by selling part of its stake in China Construction Bank (CCB). Royal Bank of Scotland sold its 4.26 per cent in Bank of China that same month, raising US$2.34 billion.

'Whether Goldman sells is difficult to call. It's been talked about ad nauseum since the CCB placement,' said JPMorgan analyst Sunil Garg. 'Some of the commercial banks have had a bigger need for capital in their own markets than Goldman. But yes, its a possibility.'

Mr Garg pointed out that shares of Chinese banks that had Western sellers have widely risen since the sell down.

'What that tells you is that most of these stakes were really financial stakes, rather than truly strategic. When it's a true strategic partner, it's viewed as a negative event.'

Goldman has said the bank would like to repay the US$10 billion it received from the US government to get out from under executive pay and other restrictions tied to the funds. -- REUTERS

[winston]

Goldman tipped to shed ICBC stake by Katherine Ng

US investment bank Goldman Sachs is considering cashing in some of its Industrial and Commercial Bank of China (1398) holdings and has been in talks with the mainland bank for months, foreign media reported.

Goldman Sachs plans to sell part of its 4.9 percent stake in ICBC to raise about US$1 billion (HK$7.8 billion), the Wall Street Journal cited sources as saying.

The US investment bank, American Express and Allianz can trade in a first batch of ICBC shares from April 28.

The rest can be traded in October 2010, according to ICBC's listing document.

Talks on the possible sale of 15 to 20 percent of Goldman's US$7.5 billion stake in ICBC began late last year, the newspaper reported.

Analysts said a sale is expected as most US and European financial institutions need to replenish their capital base.

They expect American Express to follow Goldman's example.

ICBC is expected to answer questions during its results announcement press conference today.

There is uncertainty over whether Ministry of Finance rules will impact any disposal of ICBC shares by strategic investors.

The rules, which come into effect on May 1, subject transactions involving a more than 5 percent stake in a mainland financial institution to MoF approval.

ICBC shares closed up 0.57 percent yesterday at HK$3.54. KATHERINE NG

[winston]

China's ICBC posts flat Q4 profit as provisions rise

* Flat Q4 earnings in line with forecasts
* NPL ratio continues to improve
* $1.9 bln loss on U.S. subprime, agency securities (Adds details, background)

By Tony Munroe

HONG KONG, March 25 (Reuters) - Industrial and Commercial Bank of China (1398.HK), the world's biggest lender by market value, posted flat fourth quarter earnings as an increase in provisions against soured assets offset growth in lending.

ICBC (601398.SS) shares have been under pressure on market expectations that foreign strategic investors led by Goldman Sachs (GS.N) will begin to offload their stakes in the bank when the first lockup provision lapses in April.

Across the Chinese banking industry, credit costs are forecast to rise this year on higher provisions against bad loans, while interest margins tighten following a spree of rate cuts late last year as Beijing takes measures to keep the economy growing at 8 percent or above.

Analysts also expect more non-performing loans across the industry as China's slowing economic growth squeezes borrowers.

State-run ICBC posted fourth quarter net income of 18.11 billion yuan ($2.65 billion), compared with 18.02 billion yuan a year earlier, in line with the average forecast of 18.3 billion yuan by analysts polled by Reuters Estimates.

For the year, ICBC earned 110.84 billion yuan, up 36 percent from the 81.5 billion it earned in 2007.

ICBC said it made allowances for losses on U.S. subprime mortgage and agency-backed debt totaling $1.9 billion. The bank's overall allowance for impairment losses for the year jumped by 48.3 percent to 55.5 billion yuan.

ICBC's non-performing loan ratio continued to fall, reaching 2.29 percent for the year, compared with 2.74 percent in 2007. To prepare for a possible increase in NPLs, the bank increased its coverage ratio against bad loans to 130.15 percent from 103.5 percent a year earlier.

Net interest margin improved to 2.95 percent for the year from 2.8 percent in 2007, while net fee and commission income rose 15 percent. Loans for the year rose 12.2 percent to 4.57 trillion yuan.

WORLD'S BIGGEST

Chinese banks, less battered than their overseas rivals by the global economic slowdown, hold the top three spots by market value among global banks, with ICBC by far the largest at $178.6 billion, ahead of China Construction Bank (0939.HK)(601939.SS) and Bank of China (3988.HK)(601988.SS).

That kind of muscle has fuelled expectations that China will look to buy or invest in overseas financial institutions at bargain prices, although Beijing is wary after its sovereign wealth fund made big investments in Blackstone Group (BX.N) and Morgan Stanley (MS.N) that are now under water.

ICBC, which owns 20 percent of South Africa's Standard Bank (SBKJ.J), is nonetheless looking to expand overseas through acquisitions and by growing its existing businesses, President Yang Kaisheng told Reuters in an interview earlier this month.

On Tuesday, Bank of China missed forecasts when it posted a 58 percent drop in fourth quarter profits, although investors took solace in its aggressive provisioning against bad assets.

Goldman Sachs, American Express (AXP.N) and German insurer Allianz (ALVG.DE) own a combined 7.2 percent of ICBC, with Goldman's holding at 4.9 percent. The three foreign financial firms can sell half of their respective stakes in ICBC starting April 28, and the remainder from Oct. 20.

Earlier this week, the Wall Street Journal reported that Goldman and ICBC had been in discussions about the investment bank reducing its stake in the Chinese lender.

Goldman's ICBC stake is worth roughly $8.75 billion. ICBC made no comment on its shareholders' intentions in its earnings statement.

Hong Kong shares in ICBC have lost 26 percent in the 52 weeks through Tuesday, worse than the 21 percent and 12 percent declines seen by Bank of China and Construction Bank. Foreign strategic investors sold big stakes in both China Construction Bank and Bank of China earlier this year.

[winston]

ICBC wins stock pledge by Katherine Ng

The world's most profitable bank, ICBC, has acted to defend its stock from speculative short sellers by gaining promises from its three strategic investors concerning their trading practices.

They have said any offloading of their ICBC shares would be through over-the-counter market block-lot placements.

Goldman Sachs, one of the three, agreed also to extend the lockup period of 80 percent of its holdings by one year to April 28, 2010 as it sees future strong growth in the bank and has no rush for money, its Asia chairman Michael Evans said.

"We are not in talks with any potential buyers of our shares and we are no rush to sell the rest of our 20 percent stake," Evans said.

American Express and Allianz Group - the other two strategic investors - said they would closely cooperate with ICBC.

Industrial and Commercial Bank of China (1398) yesterday reported a 36 percent increase in net profit last year to 110.84 billion yuan (HK$125.75 billion), compared with 81.5 billion in 2007. However, its fourth quarter growth was flat and it earned 18.11 billion yuan, compared with 18.02 billion yuan a year earlier. A final dividend of 16.5 fen per shares was declared.

Chairman Jiang Jianqing said the bank would continue its steady growth rate and aims to have new loan growth no less than last year's 530 billion yuan.

ICBC's non-performing loan ratio continued to fall to 2.29 percent for the year, compared with 2.74 percent a year ago. Provision coverage increased to 130.15 percent from 103.5 percent a year earlier.

Shares of ICBC have been under pressure due to massive shortselling activities on rumors that strategic shareholders would sell down their stakes after the lockup period ended on April 28.

It yesterday recovered slightly and closed at HK$3.58, up 1.13 percent.

[winston]

Goldman Sachs to keep ICBC stake until next April

US investment giant Goldman Sachs will keep most of its stake in the Industrial and Commercial Bank of China at least through April next year.

New York-based Goldman Sachs, which holds a stake of 4.93 percent in the world's biggest bank by market value, said in a statement it will keep at least 80 percent of its ICBC stake through April 28, 2010.

The US firm acquired the stake in 2006 when China'a largest lender completed a record initial public offering. At the time, a Goldman Sachs-led consortium of Allianz Capital and American Express bought a 10 percent stake for US$3.78 billion (HK$29.48 billion) in the bank.

American Express said that ''depending on market conditions the company may sell its ICBC shareholding at some point after the lock-up period, and will explore all potential methods of sale that would maximize value and minimize market impact, with a preference for a private sale to investors.''

AmEx's stake amounts to 0.38 percent of ICBC shares.

AGENCE FRANCE-PRESSE

[winston]

ICBC profit fails to ease fears by Katherine Ng, The Standard HK

Industrial and Commercial Bank of China (1398) - the world's most profitable bank - said first-quarter earnings rose 6.2 percent year-on-year because fees and commission income increased. The market consensus was for a 1 percent increase.

However, fears that major shareholders may sell their stakes saw ICBC shares falling nearly 6 percent to close at HK$4.02 yesterday.

The lender's net profit for January through March was 35.15 billion yuan (HK$39.9 billion) compared with a profit of 33.1 billion yuan a year earlier, according to its statement to the Hong Kong stock exchange.

Loan growth in the first quarter was fast, rising 13.92 percent to 5.2 trillion yuan, from 4.57 trillion yuan a year ago. Deposits grew 12.9 percent to 10.338 trillion yuan.

Like its peers, ICBC's net interest income was offset by a significantly narrowing net interest spread and fell 12.88 percent from a year ago although new loans saw double-digit growth.

Net fee and commission income rose by 9.66 percent to 13.548 billion yuan with an operating gain of 831 million yuan.

ICBC spokesman Xie Taifeng denied the lender has received notices from strategic investors about any offloading.

"We have not heard anything about any placements," Xie told The Standard.

From today, US bank Goldman Sachs can sell its 3.29 billion ICBC shares, while credit card company American Express and German insurer Allianz Group are permitted to offload their 3.67 billion shares and 640 million shares, respectively.

All of them said last month they would notify ICBC and offload shares through placements if they plan to sell their stakes in the mainland's largest bank.

Rumors have been rife since last week when the Wall Street Journal reported that Goldman Sachs, Allianz and American Express scheduled Goldman Sachs to be the sole agent to place their sellable shares when the lockup period expires today.

Together, the three strategic investors hold a combined stake of about 7 percent in ICBC.

The shares under their ownership available for sale from today are estimated to be worth about HK$30 billion, according to yesterday's closing price of HK$4.02.