China’s banking sector has been notorious for its non-recoverable loans — till a few years ago, some estimates had placed these at almost half the total outstandings. By contrast, “non-performing assets” of Indian banks are placed at just about 5 per cent of their outstandings.

That is a difference you would expect us to capitalise on. In practice?

The Industrial and Commercial Bank of China is China’s largest personal bank. It has more than 150 million customers. But its portfolio was so weak that, last year, the Chinese Government had to pump $ 15 billion into the bank to help bring its bad loans to what an expert calls “a controllable level”.

Yet last month, the ICBC raised over twenty two billion dollars through an IPO. This became the largest ever IPO in financial history. Upon listing, the bank’s market capitalisation amounted to $ 143 billion — that is almost twice the market capitalisation of the entire financials universe of India, which is around $ 85 billion. Its market capitalisation makes the ICBC the fifth largest bank in the world.

But there is a more telling index. Guess what the offers for subscription to the IPO amounted to? Over five hundred billion dollars.

And remember, the IPO brings down the government holding in the bank by just 10 per cent. That is, the government retains full and complete control over the bank — even after the IPO, it will have 70 per cent of the bank’s equity.

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