THE $19.2 billion raised by Agricultural Bank of China's initial public offering (IPO), which was priced on July 6th and 7th, does not simply mark one of the world's largest-ever stockmarket listings (the biggest, if the bank fully exercises a right to issue additional shares). It also ends a decade-long process to transform China's huge financial institutions from wards of the state to banks that resemble publicly listed firms in the rich world.

The deal attracted more than the usual amount of attention—in part because of ongoing palpitations in global markets, in part because Chinese share prices in particular have collapsed in recent months, and in part because the listing coincides with fierce debate about the health of China's banking system. Agricultural Bank itself is notable for both its gargantuan size (320m customers) and its giant past loan losses. Optimists see it as a superb macro play on China, pessimists as a Chinese version of Fannie Mae and Freddie Mac, America's nominally private, and deeply flawed, housing-finance firms.

Pricing was a matter of guesswork until the last moment. Outside China, big investors seemed anxious to buy in. “Cornerstone” investors included sovereign-wealth funds (Qatar and Kuwait), banks (Standard Chartered, Rabobank, Singapore's United Overseas Bank), a global agricultural giant, Archer Daniels Midland, and the now usual smattering of tycoons (Hong Kong's Li Ka-shing and Australia's Kerry Stokes). Inside China, internet polls suggested retail investors were less keen. These differing perspectives may explain a rare outcome for dual-listed shares: the bank's stock was valued more highly (by around 5%) in Hong Kong than Shanghai.

The deal marks the end of a reform process launched by Zhu Rongji, the then prime minister, in 2002. It involved multiple rounds of bad-debt scrubbing, internal reorganisations and, finally, public listings. A series of spectacularly large public offerings began in June 2005 when the Bank of Communications, once the country's dominant industrial bank but now just outside the dominant big four, raised $2 billion in Hong Kong. That deal was followed in short order by China Construction Bank, raising $8 billion in October of that year; Bank of China, with a $10 billion capital-raising in June 2006; and ICBC, whose $22 billion joint listing in Shanghai and Hong Kong in the autumn of 2006 was the previous biggest-ever.

Global league tables have been transformed by the listings (see chart). In theory, Chinese banks are now the world's dominant institutions, with tons of room to grow at home and the heft to buy almost any financial firm. The future of finance could, in short, be China's. But there is a lot of work to do before that happens.

The next phase of reform has two components. The first is to clean up and list many of the hundred or so other financial institutions that remain in government hands, and bring some sort of order to the thousands of rural co-operatives quietly operating outside of the government's direct control. That will not be easy. Many unlisted outfits are run by local municipalities that derive substantial benefits from them, either directly or through politically directed loans. They will not give up control without a fight.

The second is to enforce genuine commercial discipline and transparency. Mr Zhu believed that public offerings and foreign investors would put the banks under greater scrutiny, distance them from bureaucratic control and be a first step towards making them more efficient. But any pretence to true independence evaporated last year when, as part of the government's stimulus plan, bank lending surged despite the global slump and far weaker overseas demand for Chinese products. Chinese bankers argue that the government gave “guidance” rather than handing down specific targets; that the expansion was more aggressive for some banks than for others; and that lending largely supported creditworthy projects. But every bank ballooned in size, and there are strong suspicions that problems lurk beneath the surface of banks' loan books.

In 2009 Agricultural Bank's earnings rose by a staggering 26% (and by 41% on a pre-tax basis) because credit to customers grew by one-third. The bank committed 1 trillion yuan ($150 billion) in loans, about triple the bank's underlying pre-IPO equity. By setting a ceiling on what can be paid for deposits and a floor on what can be charged for loans, China provides banks with plenty of opportunity to make money as long as credit quality remains better than abysmal. That has not been the case in the past: as recently as 2008 the government paid full value for 816 billion yuan ($117 billion) of dud loans on Agricultural Bank's books (about a quarter of the bank's total). Last year's lending surge threatens a repeat, which would leave a sour aftertaste after the relative outperformance of China's banks during the crisis.

As well as the absolute expansion in lending, two other areas of China's banking system have begun to receive particular attention from regulators and outside analysts: loans backed by local municipal guarantees and loans transferred off banks' balance-sheets to trust companies, among other entities, which then sold them off as wealth-management products. Despite more public reporting, levels of opacity on such lending remain high.

In contrast, what is absolutely clear is the voracious hunger the Chinese banks have for more money—a consequence of rapid growth but also, if the past is any guide, of the need for recapitalisations to fill in the craters caused by bad loans. This year alone, according to Dealogic, Chinese banks have raised or will raise at least $89 billion. The Asia head of one global bank says he sees additional large rounds of financing every two to three years by big Chinese banks for at least the next decade, if not beyond. It makes sense for Chinese institutions to dive into capital markets. Whether investors keep meeting them there is less certain.