China's largest lender ICBC to raise 45 bln yuan in rights issue to boost capital base

08:55, November 12, 2010      

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Industrial and Commercial Bank of China (ICBC), China's largest lender by assets, said Thursday it will raise up to 45 billion yuan (6.79 billion U.S. dollars) through a dual rights issue in Shanghai and Hong Kong to boost its capital base.

ICBC's move to shore up its capital base came on the heels of China Construction Bank (CCB) and Bank of China (BOC), the country's second and fourth largest lenders by assets, respectively, raising funds in the same two markets via rights issues.

In a statement filed with the Shanghai Stock Exchange, ICBC said it will sell to A-share shareholders 0.45 new shares for every 10 existing shares at a discounted price through the issue from Nov. 16 to Nov. 22.

In another statement filed with the Hong Kong Stock Exchange, the dual-listed lender said it would offer to H-share shareholders in Hong Kong 0.45 new shares for every 10 existing shares from Nov. 29 to Dec. 16.

ICBC set its rights issue price at 2.99 yuan per share for A-share shareholders, a 36.92 percent discount from Wednesday's closing price.

The rights issue's new shares are priced at 3.49 HK dollars per share for H-share investors in Hong Kong, a 47.36 percent discount from Wednesday's closing price.

ICBC said the funds raised through the rights issue will replenish its capital base.

After the rights issue, ICBC will raise its capital adequacy ratio (CAR), a ratio of a bank's capital to its risk, to over 12 percent from its current 11.57 percent while its core CAR will be exceed 10 percent compares with the current 9.33 percent.

ICBC shares closed 2.87 percent higher at 6.82 HK dollars Thursday in Hong Kong and added 0.63 percent in Shanghai to finish at 4.77 yuan.

Major banks in China are under pressure to boost their capital bases after China's central bank raised the reserve requirement ratio by half a percentage point Wednesday night.

It also hiked interest rates by 25 basis points last month to cool lending amid increased inflation concerns. (6.6242 yuan = 1 U.S. dollar; 7.7439 HK dollars = 1 U.S. dollar)

Source: Xinhua


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