SHANGHAI - CHINA'S leaders have endorsed a long-awaited restructuring of the Agricultural Bank of China, part of a series of reforms aimed at revitalising the farm sector.

The decision to move ahead with revamping and listing shares of the bank came in an announcement late on Tuesday posted on a government website.

The Agricultural Bank is the last of China's four major state-owned commercial banks to be restructured in preparation for a share listing. The move was delayed by the heavy load of bad debts carried by the bank to rural dwellers.

'In recent years the bank has undergone restructuring and preparations for reform and is now already basically prepared for reform,' said a statement issued by the State Council, or Cabinet, following a meeting to discuss major government projects.

It said the meeting ordered the bank to push ahead with reforms aimed at making it a modern, competitive financial institution.

The statement gave no timeframe for a share listing by the bank.

With the benchmark Shanghai Composite Index down more than two-thirds since it hit its all-time peak a year ago, current market conditions are not particularly favorable.

But the bank's restructuring is part of a wider push to reform the rural economy.

Last week, the ruling Communist Party approved a landmark reform that for the first time will let farmers lease or transfer their land. The change in control of land rights was viewed as a crucial step in improving rural incomes and encouraging the creation of larger, more efficient farms.

Most farmers hold only small plots of land, with the average holding only 1.24 acres (less than half a hectare).

The Agricultural Bank will focus on providing rural financial services and increasing lending.

A share listing would help replenish the bank's capital following the restructuring. In previous cases involving the other big banks - Bank of China, Industrial & Commercial Bank of China and China Construction Bank - the government's asset management group, Central Huijin Investment Co. provided billions of dollars worth of write-offs.

Agricultural Bank reported that bad loans accounted for about a fifth percent of its total lending as of the end of June. It had assets totaling 6 trillion yuan (S$1.31 trillion) by the end of 2007, according to its annual report. -- AP