Bank of China announced on Friday that it plans to raise new capital through share and bond issues, the Wall Street Journal reported. The lender will seek shareholder approval to sell new shares that amount to no more than 20% of its existing Hong Kong and Shanghai-listed shares. The total sum could be almost US$30 billion. Bank of China will also issue as much as US$6 billion in bonds, which can be converted into A-shares. The bank increased lending by 38% year-on-year in the first half of 2009 – faster than the 20% growth posted by Industrial and Commercial Bank of China and China Construction Bank – and so analysts expected it to be the first to raise new capital. Bank of China’s capital adequacy ratio was 11.63% at the end of September, close to the minimum 11% stipulated by Beijing. Credit officials at the bank were last week ordered to halt new loans due to excessively fast lending growth so far this year. All the major lenders are expected to raise funds this year in a bid to shore up their balance sheets following record lending in 2009.
Categories