Bank of China (
The two banks, both entangled in large-scale fraud cases, will instead focus their efforts on initial public offerings in Hong Kong, the Economic Observer reported.
The two, which originally planned dual listings in the second half of this year to raise up to US$10 billion, found US regulations too burdensome, the newspaper said, citing a source close to the New York Stock Exchange (NYSE).
It said NYSE rules and US securities law require chief executive officers and chief financial officers in listed companies to be liable for the accuracy of their firms' financial reports.
The US requirements are incompatible with the identities of senior officials in China's big state-owned companies, Li Weian, a domestic corporate governance expert, was quoted as saying.
Li said the chairmen and presidents of Bank of China and China Construction Bank are all directly appointed by the central government and on that basis they do not want to risk liability under US law.
The two banks only began undertaking reforms to turn themselves into joint-stock companies early last year and cannot meet US corporate governance requirements in such a short time, unnamed industry sources told the newspaper.
It said the two banks will have fewer risks if they go public in Hong Kong, where the listing requirements are less stringent.
The central government picked Bank of China and China Construction Bank to pilot an ambitious banking-sector reform program in 2003 and injected US$22.5 billion into each of the banks to boost their capital.
Both banks have had problems with officials helping themselves to vast fortunes.
Two senior Bank of China officials are missing and believed to have fled China after up to 1 billion yuan (US$120 million) was embezzled from a branch of the bank, the South China Morning Post said yesterday.
The bank has sent a team to the Hesong Street sub-branch in northeastern Harbin city, Heilongjiang Province, to investigate, the newspaper reported, citing unidentified sources.
The scandal emerged on Jan. 15 when Northeast Expressway, a Shanghai-listed A share company, announced that 290 million yuan of shareholders' funds deposited with the branch was missing.
Newspapers in Hunan and Shanxi reported that company chairman Zhang Xiaoguang had been arrested for misappropriating funds.
An initial investigation indicated that more than 700 million yuan deposited at the sub-branch by other companies was also unaccounted for, the daily said.
The scandal would further heighten international investors' concerns over Bank of China's ability to implement effective internal controls as it prepares for a massive initial public offering in Hong Kong, the newspaper said.