Agricultural Bank of China is set to raise up to $22.1bn in the world's biggest initial public offering, underscoring the strength of investor faith in the growth of the Chinese economy.

AgBank, the last of China's big state-owned banks to go public, has managed to complete its offering during a period in which global markets have tumbled and dozens of IPOs have been scrapped.

The deal highlights investor optimism about Chinese banks, even as their peers in the west are hobbled by bad loans after the financial crisis.

Investors are also betting that state entities in China will stand behind the politically important listing to ensure its success, at least in the short term.

However, there are fears that the shares could fall on their debut in Hong Kong and Shanghai next week after the shares were priced last night towards the top of the ranges at which they had been marketed to investors.

AgBank has raised a total of $10.4bn in Hong Kong and $8.8bn in Shanghai, totalling $19.2bn. A greenshoe option to boost the size of the offering by 15 per cent would expand the proceeds to $22.1bn, making it the largest IPO ever.

Given the demand for the offering -- the shares were more than 10 times subscribed in Hong Kong and more than 20 times in Shanghai -- bankers say that the green shoe is likely to be exercised.

AgBank would like to see its listing exceed the record $21.9bn that Industrial and Commercial Bank of China (ICBC) raised in 2006, according to people close to the deal.

AgBank was the last of China's large banks to be recapitalised in preparation for an IPO and it is generally viewed in China as the weakest of the top lenders.

But investors have backed the IPO on the basis that AgBank, which has 24,000 branches, mainly in rural areas, and 320m retail customers, is well positioned to benefit from growth.

Some investors have resisted buying into the IPO in the belief that the shares were not priced at a steep enough discount to AgBank's stronger peers, ICBC and China Construction Bank.

There are also fears that Chinese banks will suffer a rise in bad loans in the coming years following an unprecedented lending spree in 2009 and 2010.

All of China's large banks have announced plans to raise tens of billions of dollars to meet stricter regulatory requirements and replenish capital. The listing of AgBank brings to a close an era of huge reform of the country's large lenders, a process that has taken a decade.

The banks have now largely been put on a commercial footing and its executives expected to run the companies at a profit.

However, the ruling communist party retains absolute control over the appointments of top executives, giving top leaders the power to step in to direct lending when they see fit.

AgBank sold 25.4bn shares in Hong Kong at HK$3.20 each, compared with an original range of HK$2.88-HK$3.48. The bank also sold 22.24bn shares in Shanghai at Rbm2.68 each, the top of its range.