As three of China's big four banks came under the spotlight with behemoth IPOs, the last remains saddled with non-performing loans and is still uncertain when restructuring will begin.

A bail-out scheme for Agricultural Bank of China, the nation's No.2 lender by assets, has yet to be unveiled or even hinted at by authorities after years of discussions. It highlights the government's cautiousness in dealing with a bank with large exposure to rural areas.

Beijing-based Agricultural Bank, which owns 12 percent of China's US$4.7 trillion in banking assets, has the worst debt quality and most employees among the big four state-owned lenders.

Burdened with US$93 billion of non-performing loans, the lender may need between US$60 billion and US$70 billion for debt disposal and a shareholding revamp before it starts to attract strategic investors and considers going public, analysts said.

The amount compares with a total of US$60 billion that was spent to bail out Industrial & Commercial Bank of China, Bank of China and China Construction Bank since 2003.

The huge sum has prompted speculation that the central government will not bear the costs alone.

Usually, bank bailouts are dished out solely by the central bank's arm Central Huijin Investment Corp. But it has been reluctant, so far, to say how much it would contribute in the Agricultural Bank's case.

Wang Jianxi, a vice chairman at Central Huijin, said last week the company will likely inject funds into the bank, but noted the lender's "historical burdens are too heavy."

On May 9, the China Business Post reported the People's Bank of China proposed to shut down Agricultural Bank's headquarters in Beijing and let provincial branches set up local headquarters and manage day-to-day operations.

The move was designed for provincial governments to share in the restructuring costs of the lender with the central government, the paper said.

But Zhou Xiaochuan, governor of the central bank, quickly dismissed such a plan. Meanwhile, the China Banking Regulatory Commission, the country's banking regulator, said in a statement it was still studying a restructuring proposal to improve efficiency at Agricultural Bank.

Cai Esheng, a vice chairman at the CBRC, noted last week in Beijing that "the model for restructuring Agricultural Bank must meet its unique characteristics and requirements."

Li Zhicheng, a spokesman at the Agricultural Bank, said in a release that the lender would prefer to "restructure as a whole bank and go public at a proper time," without giving a time frame or any details.

Although the bank's final plan is still a riddle, one thing is certain: Agricultural Bank will have a tougher road than its peers in tightening lending criteria and improving loan quality.

The bank, a major fund-raising source to sectors feeding the nation's 900 million farmers, said "policy-driven agricultural lending," or loans to the agricultural industry required by the central government, had accumulated bad loans of 349 billion yuan (US$43.7 billion) as of the end of 2005, representing 47.2 percent of total sour debt.

Agricultural Bank's profit fell 48 percent to 1.04 billion yuan last year, the lender said in its annual report on May 18. Bad loans still accounted for 26.17 percent of total lending at the end of last year, although it had dropped 17.8 percentage points from the end of 2000.

"It's not a simple question about who will cover the costs in the bailout," said Zhu Yan, a Bank of China manager, "The restructuring plan should also include measures to cut operational costs and boost profit margins to lure investors."

Regulators have been on track to urge mainland banks to dispose of bad loans, restructure and attract foreign and domestic investors to improve efficiency as well as sell shares to public investors.

The country is set to fully open its banking sector to overseas lenders by the end of the year, allowing them to accept yuan-denominated deposits from residents and manage wealth for high-end Chinese clients.

China has spent 3.5 trillion yuan, equal to a fifth of its gross domestic product in 2005, bailing out banks since 1998, according to estimates by Moody's Investors Service.

The bailout bill may exceed 5 trillion yuan after bad loans are cleared at Agricultural Bank and other smaller banks.

"Letting banks restructure and go public has proved to be successful in helping boost their brands and enhancing their performances," said Wu Ke, a Zhongtian Investment Consulting Co analyst.

Editor: Yan