The State Council has approved a major restructuring of China Everbright Group that will turn the state-owned giant into a joint-stock company, Everbright Bank said yesterday in a filing to the Shanghai Stock Exchange.

The move comes just days after the mainland's fifth-largest bank, Bank of Communications, announced in a filing that it was researching "mixed ownership" reform.

The government would allow Everbright Group to restructure from a "wholly state-owned enterprise", in which the Ministry of Finance and state-controlled Central Huijin Investment hold majority stakes, to a joint stock company, according to the filing.

The group had 2.6 trillion yuan (HK$3.3 trillion) in assets as of last year, according to its website.

"This is the direction that China is moving," Xiao Geng, a vice-president of the Global Fung Institute, told the South China Morning Post, adding that the pace at which reform was coming to the mainland's state sector was surprising.

Recently announced reforms at several state-owned firms demonstrated that Beijing was serious about following up on pledges made at a Communist Party summit held in November last year, Xiao said.

The meeting produced a 60-point list for sweeping reforms, including bringing mixed ownership to the state sector.

The leadership at state firms was seeking out approval for reform and the returns that mixed ownership could bring, Xiao said.

"These companies are actually competing for the implementation of reform," he said. "If you are owned by the state, your salary cannot go up. These are very strong incentives."

Earlier this week, Bank of Communications looked set to become the first state bank to undergo restructuring in the wake of the party summit. 

Bocom ownership is already the most diversified of the mainland's top five banks. In 2005, HSBC Holdings took a 19.9 per cent stake in Bocom, making it the first big state bank to allow significant foreign investment. The Ministry of Finance has just 26.5 per cent ownership in the bank.

Shares of the bank soared nearly 10 per cent in Shanghai on Monday on rumours of reform. Everbright Bank shares rose nearly 1.53 per cent in Shanghai yesterday while its shares in Hong Kong edged up about 0.56 per cent.

In February, the nation's biggest refiner, Sinopec, said it would sell up to 30 per cent of its oil retail business to outside investors. However, the finer details of how private shareholders would be introduced have not been disclosed.

In April, Citic Pacific agreed to buy its state-owned parent Citic Group in a deal valued at 227 billion yuan. The initial announcement sent Citic Pacific's share price soaring by about 30 per cent.

Additional reporting by Bloomberg

2.6tr yuan

The amount of assets China Everbright Group had at the end of last year, in yuan