BEIJING, May 10 -- Bank of China, the second-largest lender on China's mainland, plans to raise as much as HK$76.8 billion (US$9.9 billion) in its initial public offering that will start today, people familiar with the plan said, making it the world's biggest in six years.

    Bank of China is poised to sell 25.6 billion shares, or 10.5 percent of its enlarged share capital, at between HK$2.50 and HK$3 apiece, the three people said, asking not to be identified.

    The range would be 1.9 times to 2.2 times the company's 2006 book value, they said. The IPO price would be at least 15 percent cheaper than China Construction Bank, the mainland's third-largest lender.

    The Bank of China's IPO size is set to surpass China Construction's US$9.2 billion IPO last year that was the mainland's biggest ever.

    Shares of China Construction jumped 52 percent since they began trading in Hong Kong in November. Industrial & Commercial Bank of China, the mainland's biggest lender, plans to raise about US$10 billion to US$12 billion in a Hong Kong IPO as early as September.

    The rise in Construction Bank's shares means it is trading at about 2.6 times its 2006 book value, Bloomberg data shows. Hong Kong's Hang Seng Index has risen 16 percent this year, more than the 4.5 percent gain for all of 2005 and about 700 points off a record high of 17,920.86 in 2000.

    Bank of China plans to start trading in Hong Kong on June 1. BOC International (Holdings) Ltd, Goldman Sachs Group Inc and UBS AG are arranging the share sale. The underwriters have the option to increase the sale by 15 percent to meet investor demand, implying a possible sale of US$11.39 billion.

    Bank of China is focusing on expanding lending to individual customers and increasing fee income to try to counter slower loan growth to companies. Fee income has been growing at an annual rate of 30 percent and retail banking at 20 percent, compared with about 8 percent to 10 percent overall loan growth.

    The lender, which has 11,000 branches, has the highest percentage of loans to individuals among the four biggest state-owned lenders, according to an April 28 research report by BOC International Holdings Ltd, the investment banking arm of Bank of China.

    Bank of China's non-performing loan ratio may reach 4.3 percent this year, higher than the 3.4 percent of Construction Bank and 2.5 percent of Bank of Communications, according to BOC International.

    (Source: Shanghai Daily/Agencies)