China Bank with Big IPO Hopes Suffers New Setback

A lawsuit accusing the recently resigned chairman of China Construction Bank of taking a bribe from a U.S. company is the latest scandal to buffet the sector ahead of planned multi-billion dollar overseas listings.

Industry watchers, however, said that while investors may demand a bigger discount for the country’s top property lender when it lists — possibly this year — they do not expect the IPO to be derailed or significantly damaged.

“The market is psychologically prepared for more disclosure of such kinds of scandals,” said Louis Wong, research director at Phillip Securities in Hong Kong.

Zhang Enzhao, who resigned last week as chairman of Construction Bank, is said in a civil suit to have accepted a $1 million bribe from a U.S. company looking to sell millions of dollars of software to the bank, according to California court documents obtained by Reuters on Monday.

The bribery case against U.S. firm Fidelity National Financial Inc., which has denied any wrongdoing, is the latest in a spree of scandals to plague China’s Big Four banks.

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