The Bank of China will issue 20 billion yuan (2.4 billion dollars) in 15-year subordinated bonds after the Lunar New Year, bank officials said on Monday. The bond issue will be in two tranches of a fixed and floating-coupon part, an official at the bank's bond office said, adding that the paper will carry a call option, allowing it to be redeemed by the bank, at the end of the 10th year. "We will launch the bond issue right after the Spring Festival," the official said. The week-long holiday begins on February 9.

The bank said in a statement published on www.chinabond.com.cn that it is setting up an underwriting team to issue subordinated bonds on the interbank market this year.

Last year, the bank got central government approval to issue a total of 60 billion yuan in bonds so as to raise the fresh capital needed to meet the eight percent capital adequacy ratio (CAR) standard established by the Basel Accord.

Last year, Bank of China sold 26 billion yuan bonds on the interbank market and boosted its CAR to 8.62 percent by the end of 2004. The CAR measures how much freely accessible capital a bank has in relation to the amount of outstanding 'risk assets' or generally, its loans.

The bank, one of the country's four major state-owned commercial banks, was picked by the central government at the end of 2003 as one of two pilot program participants for banking sector reform, which involves its eventual listing on the stockmarket.

Copyright Agence France-Presse, 2005