Business / Companies

Bank of Communications executives snap up shares

By Xie Yu in Shanghai (China Daily) Updated: 2014-05-16 07:14

"We expect if substantial progress is made in promoting employee stock ownership plans and equity incentive mechanisms for top management in China's commercial banks, it will help improve their operating efficiency as employees' and executives' interests become more related to the banks' performance," they added.

Bank of Communications executives snap up shares

"It might be part of preparations for issuing preferred shares," said Zito Ji, an analyst at a mutual fund in Shanghai.

Burdened by their shares' underperformance, Chinese banks are preparing to issue preferred shares to raise funds. Preferred shares take priority over common shares in the distribution of profits and upon liquidation but provide holders with only limited rights in companies' operations.

Investors are becoming more concerned about banks' earnings capacity as interest rate liberalization stimulates more competition in the sector. There's also concern about pressure from online financial service providers. And the risks associated with nonperforming loans are rising as economic growth slows.

Bank of Communications reported 62.3 billion yuan profit in 2013, up 7 percent year-on-year.



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