Bank Of Communications Shareholders OK $9 Billion Private Placement
May 09 2012 - 6:25AM
Dow Jones News
Bank of Communications Co. (3328.HK) said Wednesday its
shareholders approved a plan to raise CNY56.6 billion (US$9
billion) via a private placement to shore up its capital base in
the face of stricter banking rules.
The approval paves the way for China's fifth-largest bank by
assets to become the first major domestic bank to seek to raise
capital since the country's banking regulator drafted strict new
capital-adequacy-ratio requirements last year.
The deal is still subject to approval from China's banking and
securities regulators, Bank of Communications said in a
statement.
The bank, known as BoCom and 19%-owned by HSBC Holdings PLC
(HBC), said in March it would issue 6.54 billion yuan-denominated A
shares at CNY4.55 each and 5.84 billion Hong Kong
dollar-denominated shares at HK$5.63 each.
Twelve institutional investors, including China's Ministry of
Finance and National Social Security Fund, HSBC, auto maker FAW
Group, and tobacco manufacturer Hongta Group, will take part in the
placement.
Under China's newly drafted capital requirements, banks that are
considered important to China's financial system, such as major
state-owned lenders like BoCom, will be required to maintain a
ratio of core capital to risk-weighted assets of at least 9.50% by
2013.
The drive is aimed at containing the risks from certain assets,
such as mortgage loans.
As of March 31, BoCom's core capital represented 9.39% of its
risky assets, according to its latest financial reports.
To protect its capital from deteriorating, the bank eliminated
its interim dividend for the January-June period of 2011, the first
time in four years.
-Rose Yu contributed to this article, Dow Jones Newswires; 8621
6120-1200; rose.yu@dowjones.com