BoCom plans $6.14b rights issue

Bank of Communications said it hopes to raise up to US$6.14 billion from rights issues in Shanghai and Hong Kong, pending shareholder approval, the Wall Street Journal reported. The fund-raising plan comes after Bank of China’s announcement in January of a US$5.9 billion convertible bond sale, and a week after China Merchants Bank revealed plans for a US$3.2 billion rights issue. Banks have been eager to boost capital given the rapid levels of loan growth in 2009 and in the first weeks of this year. While non-performing loan ratios are low, there have been doubts about the quality of new loans and concerns about the lack of transparency regarding banks’ exposure. In January, the China Banking Regulatory Commission closed a loophole that allowed banks to temporarily remove loans from their balance sheets.