March 26 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. jumped the most in five months in Hong Kong trading after shareholder Goldman Sachs Group Inc. agreed to keep most of its stake for at least another year.

ICBC, the world’s most profitable bank, rose 15 percent, erasing losses since Dec. 31, as Goldman Sachs’s pledge to keep 80 percent of its almost 16.5 billion shares eased concern about added supply of stock. Before today, ICBC had fallen 12 percent in Hong Kong this year, the worst performance among six Chinese banks traded in the city, on speculation Goldman would sell its $8.7 billion holding.

“The new commitment should significantly help alleviate overhang concerns arising from the possible sale by foreign shareholders,” said Samuel Chen, a Hong Kong-based analyst at JPMorgan Chase & Co., who raised his target price on ICBC to HK$6.1. “We now consider ICBC a top pick.”

Today’s rally lifted the bank’s market value by about $14 billion, almost equivalent to the capitalization of Citigroup Inc. New York-based Goldman Sachs benefited too: The value of its stake in ICBC jumped by $1.1 billion.

Goldman Sachs agreed to extend a so-called lockup agreement for four-fifths of its ICBC stake by a year to April 28, 2010.

Michael Evans, Goldman Sachs’s vice chairman, said at an ICBC press conference in Beijing yesterday that the U.S. firm is “not under pressure to raise capital” and is “in no rush to sell any ICBC shares.” His remarks came as ICBC reported a $16.2 billion profit for 2008, the biggest among the world’s banks.

No Timeframe

At $191 billion, ICBC’s market value is more than $80 billion bigger than that of JPMorgan Chase & Co., the largest non-Chinese bank by that measure.

ICBC shares closed at HK$4.11 at 4 p.m. local time, the highest since Jan. 6. Bank of China Ltd., the nation’s third- largest by market value, rose 7.9 percent. China Construction Bank Corp., the second largest, added 7.5 percent.

Evans said that while Goldman Sachs has the flexibility to sell the 20 percent stake not encompassed by the new lockup agreement, it hasn’t contacted investors regarding a potential sale and has no timeframe for it.

Royal Bank of Scotland Group Plc and UBS AG sold their stakes in Bank of China this year after lockup agreements expired, and Bank of America reduced its stake in China Construction Bank, raising funds to repair balance sheets savaged by writedowns on toxic securities.

Strategic Partner

Goldman’s decision to keep the bulk of its ICBC stake may yield longer-term advantages, said analyst Sheng Nan.

“By committing to extend the lockup, Goldman showed RBS and Bank of America what being a real strategic investor means - -helping the partner in the most difficult time,” said Sheng, a Shanghai-based analyst at UOB Kayhian Investment Co. “ICBC will surely remember that.”

Hong Kong billionaire Li Ka-shing, who sold some of his Bank of China shares in January, today said he’s keeping the rest as a “long-term investment.”

Beijing-based ICBC yesterday reported that 2008 profit rose 36 percent to a record 110.8 billion yuan ($16.2 billion). Fourth-quarter earnings gained 0.5 percent to 18.1 billion yuan, compared with a 59 percent drop at Bank of China Ltd. and a 2.1 percent decline at Bank of Communications Ltd.

“ICBC produced the sector’s best asset quality trends to date, while delivering competitive net interest margin and favorable foreign bond prospects,” Warren Blight, Hong Kong- based analyst at Fox-Pitt Kelton Asia Ltd., wrote in a note today. He raised his forecast for ICBC’s 2009 profit by 6 percent.

Amex Cashes Out?

American Express Co., with 1.28 billion shares of ICBC, or 0.38 percent stake, said yesterday it may sell “at some point” after lock-up periods expire on April 28 and Oct. 20, with a preference for a private sale to investors to minimize the market impact.

Goldman Sachs, American Express and Allianz SE jointly acquired their 8.89 percent stake in ICBC in April 2006, just after the Chinese bank reported an eightfold jump in pretax profit for 2005. A surge in the value of Goldman Sachs’s stake after ICBC’s initial public offering enabled the New York-based company to book a $937 million gain in 2006.

The ICBC stake generated a $495 million gain for Goldman Sachs in 2007, and a loss of $446 million in 2008.

To contact the reporter of this story: Luo Jun in Shanghai at jluo6@bloomberg.net

Last Updated: March 26, 2009 05:15 EDT