Bank of China floats in Shanghai

Bank of China is now the biggest firm on the Shanghai market

Bank of China shares ended up 23% after their first day of trading in Shanghai in the country's biggest ever domestic initial public offering.

The state-run bank, the country's second-biggest lender, has raised 20bn yuan ($2.5bn: £1.4bn) from the float.

Indicating the huge appetite for new shares among China's investors, a number of other Chinese firms are now expected to follow suit.

The Bank of China raised $9.7bn when it earlier floated in Hong Kong in May.

Fast-growing

In Shanghai trading it opened at 3.99 yuan, a 30% increase from its initial public offer price of 3.08 yuan, before eventually closing at 3.79 yuan.

The opening price gave Bank of China a market value of 710bn yuan, making it Shanghai's largest stock, comprising about 18.5% of the total capitalisation of all firms on the market.

The bank is enjoying strong growth on the back of China's booming economy and had total assets of $593bn at the end of 2005.

It estimates that its 2006 profits will be no less than 32.3bn yuan, a 25% rise on 2005.

Bank of China's successful float comes as three former employees go on trial for allegedly defrauding the bank of 750m yuan, according to the Beijing News.

It reported that the three former workers denied any wrongdoing in connection to loans being paid to a number of fictional accounts.