Bank of Communications Ltd. (BOCOM, 601328.SH, 3328.HK), one of China’s largest financial institutions, plans to raise 56.6 billion yuan through an A and H-share offering to shore up its capital reserves.
The move comes after China’s banking regulator raised standards on capital reserves.
The bank, based in Shanghai, on Thursday said many of its largest shareholders, including HSBC Holdings Plc., would participate in the multibillion-yuan private placement.
Under the terms of the agreement, the bank will offer 6.542 billion shares at 4.55 yuan each. Investors include many local, state-owned investors such as the country’s national social security fund and the Ministry of Finance.
The bank also said it would issue an additional 5.835 billion shares denominated in Hong Kong dollars on the Hong Kong Stock Exchange for HK$5.63 dollars apiece.
The total issue scale is 12.377 billion shares, equivalent to 20 percent current capital stock.
BOCOM expects to raise its capital adequacy ratio to 13 percent and its core capital adequacy ratio to 10 percent after the issue. Larger banks will soon be subject to a minimum capital adequacy ratio of 11.5 percent and a minimum core capital adequacy ratio of 10 percent
The placement program has been transferred to China Banking Regulatory Commission, the China Securities Regulatory Commission and other regulatory agencies for approval.