Industrial and Commercial Bank of China Ltd. plans to raise as much as 45 billion yuan ($6.6 billion) to replenish capital, adding to share sales by Agricultural Bank of China Ltd. and China Everbright Bank Co.
The world’s biggest lender by market value will sell as many as 0.6 shares for every 10 held, or up to 15.06 billion shares in Shanghai and 4.98 billion in Hong Kong, according to a statement yesterday.
ICBC’s offer brings to more than $60 billion the amount China’s five largest banks are raising after a record $1.4 trillion in lending last year put pressure on capital levels. Agricultural Bank started trading this month after raising $19.2 billion in the world’s largest initial stock sale in four years, while Everbright Bank is seeking a Shanghai listing.
“Chinese banks may start to face some real pressure from rising non-performing loans as early as August and September,” said James Liu, a Shanghai-based analyst at Sinopac Financial Holdings Co. “Raising capital now may also be a preparation for that.”
The board of Beijing-based ICBC also approved a plan to privatize Hong Kong-listed Industrial and Commercial Bank of China (Asia) Ltd., the statement said. The bank will announce the details after regulators review the plan, it said. The rights offer is also subject to regulatory and shareholder approval.
ICBC (Asia) shares have jumped 36 percent this year in Hong Kong trading. Shares of parent ICBC listed in Hong Kong slipped 8.7 percent in the same period, while the benchmark Hang Seng Index has dropped 3.6 percent.
ICBC will hold a shareholder meeting in Beijing on Sept. 15 to approve the rights offer, the company said.
China Construction Bank Corp., the world’s second-largest lender by market value, last month won shareholder approval for a plan to raise as much as 75 billion yuan in a rights offer.
ICBC, Construction Bank, Bank of China Ltd. and Bank of Communications Ltd. will face a capital shortfall of 480 billion yuan following new requirements for financial strength, ICBC President Yang Kaisheng wrote in an article published in the 21st Century Business Herald in April.
Agricultural Bank, the country’s largest bank by customers, rose 2.2 percent on its debut in Hong Kong on July 16, after posting the smallest first-day gain among major rivals in Shanghai a day earlier.
The debut followed a drop in Hong Kong’s benchmark index this year. That contrasts with the earlier IPOs of its four largest local rivals, who went public in Hong Kong in 2005 and 2006 amid a five-year bull market. The lender also had to contend with investor concern that a slowdown in China’s property market might saddle banks with bad loans.
Agricultural Bank today said an option to expand the share sale in Hong Kong was exercised with the issue of 3.81 billion H shares at HK$3.20 apiece, according to a statement to the Hong Kong exchange. The additional sale generated net proceeds of HK$11.96 billion ($1.54 billion), it said.
ICBC completed its record $21.9 billion IPO in October 2006.
Everbright Bank, which has been planning an IPO since 2008, said last week it plans to sell as many as 6.1 billion shares in Shanghai in an initial public offering that analysts estimate may rise as much as 18 billion yuan.