China Merchants Bank (CMB) is planning a US$3 billion rights issue by the end of 2009 to boost its capital after overpaying for Wing Lung Bank last year, Reuters reported, citing sources close to the deal. The offering would be split between holders of Shanghai-listed A-shares and Hong Kong-listed H-shares. Sources said that no investment bank has been selected to handle the issue and the size of the issue could change. Analysts noted that the rights issue would be positive for CMB as it would push the bank’s capital adequacy ratio from the current level of 6.6% to 9% in line with other major Chinese banks. Executives at CMB said the bank was only considering the possibility of an issue at this time.
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