Hina's banking regulator said it will begin visiting the country's four biggest state-owned lenders to inspect their loan books and non-loan assets as Bank of China and China Construction Bank prepare for share sales.

　　The china Banking Regulatory Commission is starting on-site inspections to help bring the average bad loan ratio among Bank of China, Industrial & Commercial Bank of China, Construction Bank and Agricultural Bank of China down further, after lowering it by 5.6 percentage points last year, the regulator said in a statement on its Website.

　　Bank of China and Construction Bank, the nation's second- and third-largest lenders, have been given six months to reorganize themselves into companies that can sell shares to the public, according to a government statement this month. Construction Bank plans to sell about US$5 billion of its stock this year, bankers involved in the transaction said earlier, with Bank of China slated to follow in 2005.

　　The four biggest banks have combined bad loans estimated by the government at 1.92 trillion yuan (US$232 billion) at the end of 2003, or more than a fifth of total lending. Standard & Poor's says the bad loans could be as high as 45 percent of all lending.

　　Last year, tightened supervision helped reduce the bad loans by 171 billion yuan to about 20 percent of total lending, the government said.

　　Bank of China and Construction Bank have been told to draft detailed plans to establish shareholding firms by the end of September, an unidentified cabinet official in charge of the pilot project to reorganize the state-owned commercial banks was cited as saying in a statement on the Website of the People's Bank of China last week.

　　The chinese government gave US$45 billion to the two banks at the end of last year as part of a pilot program to reorganize, recapitalize and sell shares publicly in the country's four biggest state-owned banks.

　　(Bloomberg News)