Jump to content
House Price Crash Forum
Sign in to follow this  
AvidFan

Bank Of China $9Bn Rights Issue

Recommended Posts

http://noir.bloomberg.com/apps/news?pid=20601087&sid=a5Hzjdgl6HXU&pos=3

Bank of China Rights Offer May Raise 60 Billion Yuan (Update2)

By Bloomberg News

July 2 (Bloomberg) -- Bank of China Ltd., Asia’s third- largest lender by market value, plans to raise as much as 60 billion yuan ($8.9 billion) in a rights offer to replenish capital.

The lender will sell 1.1 shares for every 10 held, or as many as 19.56 billion shares in Shanghai and 8.36 billion in Hong Kong, a statement to the Hong Kong stock exchange showed today. Beijing-based Bank of China, which made more loans than any local rival last year, in June completed the sale of 40 billion yuan of six-year bonds that can be converted into shares.

The new sale adds to as much as $45.6 billion in fundraising announced by China’s five biggest state-controlled banks after they extended record loans last year to support a government-led stimulus plan. Agricultural Bank of China Ltd., the nation’s largest lender by customers, is in the midst of a $20.1 billion initial public offering in Shanghai and Hong Kong.

A sale by Bank of China would “damage market sentiment and banking shares further because we’ve already been flooded by share offerings,” Tang Yayun, a Shanghai-based analyst at Northeast Securities Co., said before the announcement. “This is a surprise given that they just completed a bond sale.”

The subscription price for the rights shares will be at least 2.03 yuan apiece, or equivalent to the bank’s net asset value per share last year, the statement said. The new stock will be priced at a discount to market value and will be the same for investors in Shanghai and Hong Kong after adjusting for exchange rate, it said.

Trade Halted

Bank of China’s Hong Kong-listed shares were halted from trading today pending the announcement, and will resume on July 5, the statement said. In Shanghai, the stock was suspended in the afternoon. Bank of China has fallen 5.5 percent this year in Hong Kong to HK$3.97, outperforming the 9 percent drop in the benchmark Hang Seng Index. The stock has lost 21 percent in Shanghai to close at 3.40 yuan today.

The Hong Kong portion of the rights offer will be “fully underwritten,” the bank said in the statement, which didn’t include details about the underwriters. The share sale will need to be approved by investors and regulators including the China Banking Regulatory Commission and China Securities Regulatory Commission, it said.

In March, Bank of China won investor approval to sell shares equivalent to as much as 20 percent of outstanding stock in Hong Kong or Shanghai, or in both markets. President Li Lihui told investors in January the bank favored a Hong Kong sale.

The lender’s capital adequacy ratio fell to 11.09 percent as of March 31, below the minimum 11.5 percent required by the China Banking Regulatory Commission.

Central Huijin

Central Huijin Investment Co., which owns 67.5 percent of Bank of China, did not take part in the bond sale. Huijin, which owns stakes in China’s largest financial institutions on behalf of the government, said in April it will participate in fundraising by Bank of China, Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp.

China’s government has stepped up measures to drain liquidity on concern that last year’s credit boom will create an asset bubble. Policy makers aim to cap new loans at 7.5 trillion yuan this year, down 22 percent from 2009, and have told banks to set aside more deposits as reserves three times since Jan. 1.

ICBC, Construction Bank, Bank of China and Bank of Communications Co., the nation’s four-largest publicly traded banks, face a capital shortfall of about $70 billion as they seek to comply with regulatory requirements and meet loan demand, ICBC President Yang Kaisheng wrote in an April article.

ICBC Plans

ICBC, the world’s largest lender by market value, may sell 25 billion yuan of convertible bonds as soon as August, a person familiar with the matter said last month. The bank also has a general mandate to sell stock equivalent to as much as 20 percent of outstanding shares in Shanghai and Hong Kong.

In addition, ICBC plans to sell 22 billion yuan of subordinated bonds as soon as next month to retire debt sold in 2005, a person with knowledge of the matter said today.

Beijing-based Construction Bank, the world’s second-largest by market value, last week won shareholder approval to raise as much as 75 billion yuan in a rights offer.

Something in the FT the other day about Chinese corporate bonds up in double-digit percent (amount issued) this year too.

Last call for the suckers rally. Will it be Dubai times 1000?

Share this post


Link to post
Share on other sites

Lots of loans to various government entities backed by over valued property. Naturally they want someone else to cover their losses.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.