Agricultural Bank of China on Tuesday confirmed plans to raise a world-record 23.2 billion dollars in a dual IPO in Hong Kong and Shanghai, passing the previous record of 22 billion dollars.
The last of China's "big four" state banks to list said it would raise the money if its monster initial public offering (IPO) is fully subscribed when it begins on Wednesday.
Major institutional investors including sovereign wealth funds have already expressed strong interest in the IPO, which is on course to surpass the previous record set in 2006 by Industrial and Commercial Bank of China (ICBC).
AgBank said Tuesday that it planned to raise 13.1 billion US dollars from its Hong Kong IPO, with a price range of 2.88-3.48 Hong Kong dollars (37-44 US cents) a share.
Xiang Junbo, chairman of AgBank, said government efforts to boost growth in China's depressed central and western regions would help the rural lender.
"The county area business will be one of our key profit drivers," he told a press conference in Hong Kong on Tuesday.
"(Agbank) is well positioned to capitalise on China's next wave of growth." The bank, which has been criticised for the amount of bad loans on its books, has worked in recent years to chop that figure, Xiang said.
"The bank has made substantial improvement in the last few years," he said.
Late Monday the bank said it was planning to raise 10.1 billion dollars from the Shanghai offer, with a range of 2.52-2.68 yuan (37-39 US cents) a share.
AgBank said it would give the final pricing of the IPO on July 7, and its stock would start trading in Shanghai on July 15 and in Hong Kong on the following day.
Estimates for the IPO had ranged from about 19 billion dollars to 30 billion dollars as market volatility left a key question mark over the sale's chances of smashing previous records.
Some analysts consider the rural lender to be the weakest of China's big banks, owing mainly to its burden of bad loans and the nature of its business.
Analysts say the return on capital from rural loans is typically 20-30 percent less than that for loans in urban areas, as the size of the loans is generally smaller and monitoring costs higher.
Still, 11 so-called cornerstone investors -- including the state investment funds of Qatar and Kuwait, British-based bank Standard Chartered and Hong Kong's richest tycoon Li Ka-shing -- are pouring money into the massive sale.
Shanghai shares tumbled 4.27 percent on Tuesday on news that AgBank had priced its Shanghai shares unexpectedly low, raising fears about confidence in China's stock markets.
Francis Lun, general manager of Hong Kong's Fulbright Securities, said after it becomes a public company, the rural lender will be under mounting pressure from new shareholders to shore up a balance sheet dogged by a heavy bad debt load.
"(AgBank) is the worst of the Big Four, but in some ways that works to its advantage because there is lots of room to improve," he said.
Investor optimism that markets may have bottomed out could help the sale, said Aaron Boesky, chief executive of China-focused hedge fund Marco Polo Investments.
"Retail interest should surprise on the upside, based on cheap pricing and current perceptions regarding a bottom in the market," he told Dow Jones.
The share sale comes after Hong Kong's bourse, faced with growing competition from Shanghai in recent years, claimed top spot as the world's largest IPO market last year, raising almost 32 billion US dollars.
However, market volatility has also seen several companies shelve Hong Kong IPOs in the past two months.
Swire Properties, a major real estate developer in the territory, aborted a planned a share sale worth 3.09 billion US dollars last month, two days after Giti Tire, China's largest tyre maker, shelved a 500-million-dollar IPO.