An official with the Agricultural Bank of China (ABC) said he expects the bank to complete its financial restructuring this year and to go public as soon as possible. "We're now at the same level as the Industrial and Commercial Bank of China, Bank of China and China Construction Bank before their joint-stock reforms," said vice president of the ABC, Han Zhongqi.

The bank, one of the leading four commercial lenders in China, reported a non-performing loan (NPL) ratio of 23.44 percent in 2006, 2.73 percentage points lower than in 2005 but still high above the government-required 5 percent for commercial banks.

Meanwhile, its reserve can only cover 4.59 percent of possible losses caused by bad loans, far from the 60 percent demanded by regulators. "The bad loan includes more than 300 billion yuan (37.5 billion U.S. dollars) of policy credit," said Han. "If that is excluded, the banks problem assets are roughly of the same as the other three major lenders."

Policy credit refers to loans the bank was required to make by the government to fund its development policies mainly in rural areas. The other three of the "big four" state-owned banks, namely the Bank of China, China Construction Bank and Industrial and Commercial Bank of China, have all listed in the stock market.

The ABC is being audited by Deloitte Touche Tohmatsu CPA Ltd., a leading accounting agency, and the National Audit Office, with an audit report to be released this month, said Han. The bank is waiting for a multi-billion-dollar capital injection from the government to complete its financial restructuring in the second half and will then immediately set about changing itself into a joint-stock company, Han said.

However, specific plans have yet to be made by government departments and the bank won't rush to get the job done, he noted. "The joint-stock reform of the ABC is the last of the country's reforms of state-owned commercial banks and we can't make any mistakes or errors," said Han. "We won't be massively cutting staff or dissolving internal institutions this year, as both the number of the bank's institutions have been halved to 24,900 and staff reduced to 450,000," he said.

With total assets of 5.36 trillion yuan (670 billion U.S. dollars) at the end of 2006, the ABC raked in 58.1 billion yuan in operating profits last year, the bank's figures show. The ABC will mainly address the country's rural development as required by the government, which will result in fewer profits than urban businesses bring the bank, according to Han. However, the problem will be solved in the long term as a result of government support and the country's improving county-level economy, said Han.

He said the ABC has lent 2.07 trillion yuan to fund rural projects in the past six years and will add a net 470 billion yuan of credit within five years.