Industrial commercial bank of China (ICBC) is the world’s largest commercial bank considering both income and market capitalization. It is among the ‘Big Four’ commercial banks owned by the state of China. In January 1, 1984, the bank was registered as a limited company with more than 18000 outlets, and an asset base of US$1.9 trillion. In the year 2011, the bank was ranked position seven by Forbes Global 2000 in their list of the biggest public companies in the world.
In October 2006, the Industrial and Commercial Bank of China, or ICBC, successfully completed the world largest Initial Public Offering (IPO), raising $21 billion. It beat Japan’s 1998 IPO of NTT DoCoMo by a wide margin to earn a place in the record books (NTT raised $18.4 billion in its IPO). The ICBC offering followed the IPOs of a number of other Chinese banks and corporations in recent years. Indeed, Chinese enterprises have been regularly tapping global capital markets for the past decade as the Chinese have sought to fortify the balance sheets of the country’s largest companies, to facilitate transparency and improvement of corporate governance, and to give industry leaders of China a global recognition.
Since 2000, Chinese companies have raised more than $100 billion from the equity markets. About half of that came in 2005 and 2006, largely from the country’s biggest banks. Shares sold by firms in China are contributing a great percentage of global equity sales about 10 percent in 2006 compared to 2.8 percent in 2001, surpassing the total amount raised by companies in the world’s second largest economy, Japan.
The bank claims 2.5 million corporate customers and 150 million personal accounts. Some 1,000 institutions from across the globe reportedly bid for shares in the IPO. Total orders from these institutions were equivalent to 40 times the amount of stock offered for sale. In other words, the offering was massively oversubscribed. Indeed, the issue generated total demand of some $430 billion, almost twice the value of Citi, the world’s largest bank by market capitalization. The listing on Hong Kong attracted some $350 billion in orders from investors globally.
The domestic ratio of the share sales, through the Shanghai exchange, attracted some $80 billion in orders. This massive oversubscription enabled ICBC to raise the issuing price for its shares and reap some $2 billion more than planned.
In summary, investors will always be attracted to investments that have prospects of yielding high returns. Industrial Commercial bank of China has exhibited that it is capable of generating high profits, and this is the reason behind over subscription of IPOs. This bank also attracts many account holders because of the numerous law cost benefits attributed to economies of scale.
References
Industrial commercial bank of China . (1884, January 1). Share Information. Retrieved March 3, 2013, from ICBC: http://www.icbc-ltd.com/ICBCLtd/Investor%20Relations/Share%20Information/Shareholding%20Structure/
pwc. (2012, May). Analysis of China's Top Ten Listed Banks for 2012. Banking Newsletter, pp. 9-61.
Taylor, D. (2012). Will Chinese Banks Change the World? Chinese banks and Cambridge, 7-18.
