China Merchants Bank plots $5.4bn rights issue

China Merchants Bank (600036.SH, 3968.HK), the nation’s sixth-largest lender, plans to raise up to US$5.4 billion by issuing shares to investors in mainland China and Hong Kong, Bloomberg reported. The bank will offer 2.2 shares for every 10 existing shares held by investors and will set pricing at a later date, it said yesterday in a filing to the Hong Kong Stock Exchange. Chinese banks are raising capital to meet higher adequacy requirements from China’s bank regulator, which has steadily raised requirements to mop up the liquidity that is fueling inflation and guard against non-performing loans. In an e-mailed statement yesterday, China Merchants Bank said that its “core capital adequacy ratio is substantially lower than the new regulatory minimum.” As of March 31, its core capital adequacy ratio was 7.7%, according to the filing, compared with a required ratio of 8.5%.