The bank set a price range of between HK$1.80 and HK$2.25 (23-29 U.S. cents) per share in the offering.

As the first of China's big State-owned banks to list shares overseas, the offering is considered a litmus test for the future IPOs of Industrial & Commercial Bank of China and Bank of China, the mainland's first and second-largest banks.

The IPO is also expected to be the largest-ever overseas listing by a mainland company, surpassing the US$5.7 billion China Unicom Ltd. IPO in 2000.

Analysts said that the expected deal should price between 1.5 and 1.9 times the bank's book value in order to attract long-term institutional investors, but fund managers cautioned that the final price needs to fall in the lower end of the range or it could be too big for the Hong Kong market to absorb. Book value refers to a company's total assets minus liabilities and intangible assets such as goodwill.

CCB declined to comment on the report Wednesday.

The price range is similar to the price of the Bank of Communications Ltd., or Bocom, which sold its US$1.9 billion IPO in Hong Kong in June for 1.6 times book value.

Bocom, the mainland's fifth-largest lender, is now trading more than two times book value — a price considered by some fund managers to be too high to keep institutional investors interested.

Until now, Bocom stocks have been one of the few avenues for equity investors to invest in the mainland's banking system. But if the final pricing of CCB shares are low enough to attract long-term institutional investors, fund managers caution investors could swap their shares of Bocom for CCB.

CCB's 2.84 percent net interest margin, which measures the profitability of a bank's loan portfolio, is significantly higher than Bocom's 1.98 percent.

Underwriters of the deal include Credit Suisse First Boston Corp., China International Capital Corp. and Morgan Stanley.

Retail investors can apply for the shares from Oct. 14, with order books closing Oct. 19 and a trading debut Oct. 27.

(Source: Shenzhen Daily/Agencies)