The floatation is attracting a queue of first-time investors

China's second-largest lender is launching a $9.8bn (�5.2bn) flotation on the Hong Kong market.

Anticipating strong demand, three million share applications have been printed for the territory's residents.

The world's biggest initial share offering since 2000 comes as China continues to open up its banking sector to foreign competition.

Fears allayed

Investing in new flotations is a popular pastime in Hong Kong. One local broker said 2,000 new accounts had been opened in one week by people keen to get in on the deal.

Some analysts have warned off investors, pointing out Bank of China's problems with bad loans, fraud investigations and antiquated computer systems.

Three million share application packs have been printed

But an emerging credit culture and the improving quality of loans has allayed fears.

The bank's position as China's principal foreign exchange bank has also enhanced its profile in the eyes of would-be investors.

Many of those queuing had already bought shares in other banks which have already floated.

"I will buy Bank of China (shares). It'll bring me profits, just as China Construction Bank did," said 40-year-old clerk Helen Mok.

Trading of Bank of China shares is expected to start on 1 June.

Challenge ahead

A consortium of international banks led by Royal Bank of Scotland spent $3bn on a 10% stake in Bank of China last year.

China's state banks face a huge increase in competition from December, when the government will open the retail banking market to overseas lenders who will be able to open their own branches in the country.

A number of Chinese banks have been seeking foreign investment to help them prepare for the challenge.

The country's largest lender, Industrial & Commercial Bank of China, is planning a $10bn share flotation for later this year.