Unnamed sources have told Bloomberg that Agricultural Bank of China will raise $19.2 million in its IPO (initial public offering) after pricing its Hong Kong shares at HK$3.20 and its Shanghai shares at 2.68 yuan. Neither the company nor either stock exchange has made an official announcement.

Those prices would put the amount raised by the last of China’s biggest bank to go public at $19.2 billion. That’s at the bottom of the $20 billion to $30 billion range analysts predicted for the offering. If the bank exercises its option to increase the size of the IPO by 15% to meet excess demand, that would bring the amount raised in the IPO to $22.1 billion and break the record for the most raised in an IPO, set by Industrial & Commercial Bank of China’s $21.9 billion October 2006 IPO.

It’s a tribute to the arm-twisting power of banking regulators in Beijing and to the market’s faith that the government will make sure that investors in the IPO will make a profit that the offering went at all.

The Shanghai stock market is in the middle of a bear market that saw prices hit a 15-month low last week.

 And Agricultural Bank of China runs one of the riskiest portfolios among China’s big banks. The bank made a record 1 trillion yuan in new loans in 2009. The non-performing loan ratio was at 2.91% in December. That’s the highest among China’s big lenders.

The property loan portfolio was in even worse shape. 3.47% of loans to property developers were delinquent at the end of 2009.

Because Agricultural Bank of China’s loan portfolio is so risky and because the Shanghai stock market has been depressed by worries about a slowdown in China’s economic growth and a government crackdown on real estate loans, I’ve argued that this IPO is a good test of the power of the Beijing government over the financial markets. The success of this IPO under these circumstances is to me an indicator (For more on this indicator see my post http://jubakpicks.com/2010/06/16/4306/ ) that Beijing will be able to pull of the tricky task of simultaneously raising reserve requirements for its bank and giving them enough capital to lend so they can keep the economy growing. (For more on China’s attempt to have tougher bank regulation and looser lending too, see my post “Move over Charles Ponzi and Bernie Madoff—China is running history’s largest financial scam”  http://jubakpicks.com/2010/06/01/4106/ )

The IPO is scheduled to begin trading on July 16.