The strong demand for the shares meant that they were priced at HK$2.35 — the upper end of analysts’ expectations.

The flotation will be the litmus test for the two other state-controlled Chinese banks that are poised to list their shares within the next two years.

CCB, which operates China’s second-biggest branch network, attracted orders for about ten times as many shares as were on offer. Total demand reached $80 billion and three quarters of the demand came from international institutional investors.

The retail portion of the the float was lifted to 7.5 per cent, from 5 per cent, as small investors applied for about 42 times as many shares as were initially available.

Institutional investors, including Hong Kong tycoons and Chinese insurers, placed orders of about $60 billion.

CCB sold a total of 26.486 billion shares, or 12 per cent of its enlarged share capital. Shares will start trading in Hong Kong next Thursday. The share offering was China’s biggest to date and the largest in the world since Kraft Foods in America raised $8.7 billion in June 2001.

The deal values CCB at $66.5 billion, making it the third biggest bank in Asia after Mitsubishi UFJ and Mizuho, the Japanese banks.

Analysts expect the bank to benefit from China’s booming economy which expanded at a faster-than-expected 9.4 per cent in the third quarter, marking the ninth successive quarter of economic growth of greater than 9 per cent.

Bank of America and Temasek Holdings, the Singapore Government’s investment agency, hold 8.67 per cent and 6 per cent in CCB respectively, after buying a combined $1.5 billion worth of CCB shares.

Morgan Stanley, China International Capital. and Credit Suisse First Boston were the deal’s joint bookrunners.

CCB has cut a quarter of its staff and a third of its branches since 2002 to improve its efficiency. The bank is also tightening control over its 14,250 branches.

Agnes Deng, a fund manager at Standard Life Investments, said: “The big demand shows investors want exposure to China’s banking sector.

“With more foreign investors involved, corporate governance should improve. That’s why people become so interested.”

Ki-Soon Park, deputy managing director at KDB Asia, said: “This is a long-term investment. Chinese banks should be doing well as the economy grows.”

Chinese banks have in the past been plagued by bad debts accumulated over decades of state-directed lending. However, the Chinese Government has injected $408 billion to clean up CCB and its rivals, including Bank of China and Industrial and Commercial Bank of China, which plans to list next year.

Royal Bank of Scotland is one of only a handful of foreign banks that have taken stakes in the Chinese banking sector.

China wants to attract foreign knowledge and capital and strengthen the financial industry as it liberalises its currency and opens the sector to foreign competition.

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