While globalization has sparked a buying ......... in emerging markets generally, China has been the front-runner in raising new capital in the banking sector, explains Keith Pogson of Ernt & Young.

China's record-breaking performance in raising more than US$46bn is all the more stunning given that, just two years ago, the challenge of cleaning up balance sheets and non-performing loan portfolios was ......... next to impossible by the international investment community.

China's financial institutions have historically suffered the disadvantage of having dual operating roles: the authorities viewed them not simply as banks, but also as a major ......... for providing capital to state-run companies.

China's banks kicked ......... their structural reforms ahead of receiving capital injections from the central government.

During the past five years, they have streamlined their organizations through closure of less efficient branches and scaling back their workforces through ......... and early retirement, among other factors.

For example, China Construction Bank and ICBC closed more than 11,500 and 12,900 branches respectively, and each reduced its workforce by over 100,000 employees; the financial restructuring of these banks was ......... in China's banking history.

The initial recapitalization from 2003-2005 amounted to at least RMB608bn, consisting of an injection of capital through State Administration of Foreign Exchange (SAFE) investment, new shares subscribed to by the National Social Security Fund, and accumulated losses ......... by the Ministry of Finance.

In addition to capital injections by the Chinese government, restructuring was accomplished in a two-stage .........-out of non-performing loans; initially, approximately RMB420bn of Loss-Classified NPLs were written off from the four banks' accounts.

Alliances with foreign banks turned out to be a vital ......... in the success of the IPOs, as they provided Chinese banks with technical assistance and, most importantly, equity stakes that offered additional credibility and reassurance to other investors when the banks came to market.

From a ......... combined outlay of estimated US$500m at the end of 2003, foreign investors have now committed as much as US$18bn to the Chinese banking sector in the past 12 months alone.