The IPO of Industrial and Commercial Bank of China and the ‘Chinese Model’ of Privatizing Large Financial Institutions
Franklin Allen, Jun "QJ" Qian, Susan Chenyu Shan and Mengxin Zhao, January 2012
This is an updated version of #11-63
Abstract: We examine the privatization process of the Industrial and Commercial Bank of China (ICBC), the
largest bank in the world by market capitalization, and its dual IPOs in the Hong Kong and
Shanghai Stock exchanges in 2006. The Chinese government retains majority equity ownership of
ICBC while foreign institutional investors hold minority equity stakes. Other large financial
institutions went through the same reform process and have similar, post-IPO ownership structures.
The largest Chinese banks, as a group, outperformed their counterparts from other emerging and
developed markets before and during the 2007-2009 financial crisis. We argue that the ‘Chinese
model’ of privatizing and managing large financial institutions can be advantageously used in other
Keywords: banks, IPO, privatization, non-performing loans, stock returns.
JEL classifications : G2, G3, L1,
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