CCB plans share sale to raise $11b

By BRETT MILLER (China Daily)
Updated: 2010-04-07 09:26
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BEIJING: China Construction Bank Corp (CCB) plans to sell shares to raise about 75 billion yuan ($11 billion) of capital this year, said two people with direct knowledge of the matter.

The Beijing-based bank may raise as much as 45 billion yuan in a private placement on the local share market in Shanghai and 30 billion yuan in a rights offer in Hong Kong, said the people, declining to be named because the plans are not public.

CCB is joining rivals Industrial and Commercial Bank of China (ICBC), Bank of China and Bank of Communications, who have announced plans to raise a combined 107 billion yuan after a credit boom drained capital.

Chinese lenders doled out a record 9.59 trillion yuan in 2009, helping fuel a recovery in the world's third-largest economy.

"The plan should be well received by the market," said Liu Yinghua, a Shenzhen-based analyst at Ping An Securities Co who has a "buy" rating on Chinese banks.

"The amount and the methods are within expectation. China's banks are set for a rebound after the dust settles from capital-raising concerns," he added.

The State Council approved the fundraising plan, which is subject to revision according to market conditions, the people said.

CCB President Zhang Jianguo said in March the lender plans to raise capital "this winter or next spring", without giving details. Yu Baoyue, a Beijing-based press officer for the company, declined to comment on Tuesday.

The bank's shares rose 0.35 percent to close at 5.71 yuan in Shanghai on Tuesday, trimming their decline this year to 7.8 percent. The stock has fallen 2.6 percent in Hong Kong this year. The Hong Kong market was closed on Tuesday for a public holiday.

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The company's capital adequacy ratio dropped by almost 1 percentage point last year to 11.7 percent as of Dec 31, close to the 11.5 percent that Chairman Guo Shuqing cited as the banking regulator's minimum requirement for the lender.

ICBC, the world's most profitable bank, said last month it would to sell as much as 25 billion yuan of convertible bonds, and seek shareholder approval to issue stock equivalent to as much as 20 percent of equity capital in Hong Kong.

Bank of China, the nation's third-biggest, won shareholder approval for a 40 billion yuan convertible bond sale on March 19. Bank of Communications said in February it will raise as much as 42 billion yuan in a rights offer.

Profit surge

CCB, part-owned by Bank of America Corp, more than doubled profit in the fourth quarter as bad loans declined and lending surged. The lender extended 1 trillion yuan of new credit last year, double the figure in 2008, taking its outstanding loans at the end of the year to 4.69 trillion yuan.

"CCB remains our top pick among the large banks, as the bank has a more defensive balance sheet than large peers," Samsung Securities Co said in a March 30 report.

Bloomberg News