UPDATE: BoCom: No More Fund-Raising Plans After Rights Issue
June 07 2010 - 2:19AM
Dow Jones News
Bank of Communications Co. (3328.HK), China's fifth-largest
lender by assets, said Monday it has no more fund-raising plans in
the short term after its CNY33.1 billion (US$4.8 billion) rights
issue.
The bank, 19%-owned by HSBC Holdings PLC (HBC), said Sunday it
will raise CNY33.1 billion from a rights issue in Shanghai and Hong
Kong, 21% lower than the maximum CNY42 billion it originally
planned to raise amid weak stock market conditions and Agricultural
Bank of China Ltd.'s huge initial public offering.
"The proceeds from the CNY33.1 billion rights issue are
sufficient to satisfy the bank's need for capital in the coming
three years at least," said Qian Wenhui, a vice president of the
bank. "After the rights issue, the bank has no plan to raise more
funds from the capital market in the short term."
Qian said the original CNY42 billion fund-raising target was a
top-line estimate.
"It doesn't mean we will always raise funds at the top end," he
said. "When we plan fund-raising, we must consider market
conditions, the bank's need for business expansion and
shareholders' interest."
The Chinese and Hong Kong stock markets have fallen sharply
recently because of concerns about Europe's sovereign-debt crisis
and worries China's efforts to cool its property market could
result in a double dip for the economy.
China's benchmark Shanghai Composite Index has dropped 20% since
the middle of April, while Hong Kong's Hang Seng Index has fallen
10%.
Qian said BoCom's rights issue will help the bank boost its core
capital adequacy ratio--equity and retained earnings as a
proportion of assets--by 1.6 percentage points. Its core
capital-adequacy ratio is the lowest among China's publicly traded
major banks. At the end of last year, the ratio was 8.15%, close to
the regulatory minimum of 7%.
Qian also said HSBC will fully subscribe to the rights issue. To
maintain its level of ownership, the U.K. lender will spend around
US$900 million on the issue, according to a calculation by Dow
Jones Newswires.
Bank of Communications said it will offer 3.89 billion
yuan-denominated A shares in Shanghai at CNY4.50 each, and 3.46
billion Hong Kong dollar-denominated shares in Hong Kong at HK$5.14
each.
Around 0540 GMT, the bank's shares were down 3.1% at CNY6.19 in
Shanghai, and down 1.6% at HK$8.06 in Hong Kong. The Shanghai
Composite Index was down 2.0% at 2502.56, and the Hang Seng Index
was down 2.4% at 19,313.05.
-Rose Yu contributed to the article, Dow Jones Newswires;
(86-21) 6120-1200; rose.yu@dowjones.com
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