Bank of Communications Co., China’s fifth-largest lender by market value, won regulatory approval to sell as much as 26 billion yuan ($4 billion) of subordinated bonds to bolster its capital.
The sale was approved by the China Banking Regulatory Commission and the People’s Bank of China, and is part of the lender’s plan to raise as much as 80 billion yuan in China by the end of this year, the bank said in a filing to the Hong Kong stock exchange yesterday. BoCom started the process, intended to improve its capital structure, with a 25 billion yuan sale in July 2009.
China’s five biggest banks are seeking funding from the domestic and overseas bond markets to replenish capital as regulators tighten requirements to curb inflation and reduce the risk of defaults. Shares of the lenders, which raised $61.5 billion from equities last year, have lost an average 27 percent this year on concern that a record two-year credit boom may unravel and lead to rising bad debts.
The sale of fixed-rate bonds will start Oct. 21, comprising as much as 5 billion yuan of 10-year bonds and as much as 21 billion yuan of 15-year securities, according to a statement posted on Chinamoney.com.cn, a website of the China Foreign Exchange Trade System.
BoCom fell 5.1 percent to HK$4.66 in Hong Kong trading as of 1O:53 a.m., more than the 3.3 percent decline in the city’s benchmark Hang Seng Index, bringing its drop for the past 12 months to 45 percent.
Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, said Sept. 26 its board approved a plan to sell as much as 70 billion yuan of subordinated debt. China Construction Bank Corp., the country’s second-largest lender, will sell as much as 80 billion yuan of subordinated notes by the end of August 2013, it said Aug. 18.