The Bank of China, the biggest of China's 'Big Four' state-owned commercial banks, has set out plans to raise more than $3bn by selling shares later this month.

Bank of China's long-awaited debut on the Hong Kong Stock Exchange (HKSE) looked as if it might be derailed in January when the bank's former president was arrested over corrupt loans during his time there.

The bank's listing prospectus said that Wang Xuebing was now facing "prosecutorial action" in China, the first news of Mr Wang for several months.

Bank of China is the second biggest lender in Hong Kong, after HSBC, and the mainland's most important foreign currency trader.

Investor fears

The bank's $3.17bn stock market listing of its Hong Kong operations on 25 July will be the city's biggest market debut for at least two years.

The arrest of Mr Wang shocked international financiers because the 49-year old fluent English speaker had been seen as a financial reformer and a prot�g� of China's Premier Zhu Rongji.

China's banking system is weighed down with bad debt from technically bankrupt state firms.

Nonetheless, foreign banks are eager for a slice of the action.

Standard Chartered said it would invest $50m to buy a shareholding in Bank of China.

Operational reforms

Bank of China's listing of its Hong Kong operations is seen as an important step towards reform of mainland banks.

The Hong Kong operations have been restructured ahead of the listing.

The overhaul aimed to create a model operation in Hong Kong which could provide lessons, and skilled personnel, to tackle the far larger task of reforming the mainland bank.

The bank has paid a $20m fine - split between US and Chinese regulators - over irregular loans at its New York office when Mr Wang was in charge there.

Its prospectus said Mr Wang and another, Hong Kong based manager, were "the subjects of prosecutorial action in mainland China and may be punished for their violation of laws and regulations".

It has priced its shares at between HK$6.93 and HK$9.5 each.