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Everbright Bank Said to Raise $3 Billion in Hong Kong Offering

China’s 11th-biggest lender by market value joins other banks seeking to bolster their capital through Hong Kong listings ahead of requirements to hold more reserves. Photographer: Qilai Shen/Bloomberg
China’s 11th-biggest lender by market value joins other banks seeking to bolster their capital through Hong Kong listings ahead of requirements to hold more reserves. Photographer: Qilai Shen/Bloomberg

Dec. 14 (Bloomberg) -- China Everbright Bank Co. will raise about $3 billion after pricing Hong Kong’s biggest first-time share sale this year below the midpoint of a marketed range, said two people with knowledge of the matter.

The lending unit of state-controlled China Everbright Group will sell about 5.84 billion shares at HK$3.98 apiece after exercising an option to increase the size of the sale, according to two people who asked not to be identified because the number of shares wasn’t made public. The bank may sell a further 760 million shares using an over-allotment option, the people said. Everbright Bank said in its IPO prospectus it would sell the shares at HK$3.83 to HK$4.27 each.

China’s 11th-biggest lender by market value joins other banks seeking to bolster their capital through Hong Kong listings ahead of requirements to hold more reserves. Last month, Huishang Bank Corp. and shareholders raised $1.4 billion in an IPO, and Bank of Chongqing Co. completed a $559 million offering.

Everbright Bank said in statements to the Shanghai and Hong Kong stock exchanges yesterday that it will sell shares at HK$3.98 each. The statements didn’t give the number of shares to be sold.

Chinese regulators are pushing banks to strengthen their balance sheets as concern mounts that slowing economic growth may lead to an increase in bad debt. The share sale will boost Everbright Bank’s core capital ratio by 1 percentage point, Senior Executive Vice President Lin Li said at a Dec. 9 briefing in Hong Kong.

Beijing-based Everbright Bank’s capital adequacy ratio stood at 9.65 percent as of Sept. 30. The China Banking Regulatory Commission’s rules require banks such as Everbright, which isn’t classified as systemically important, to have minimum capital buffers of 10.5 percent before the end of 2018.

The lender had planned to raise as much as $6 billion from a share sale in Hong Kong, before scaling it back to about $1.7 billion and then delaying it in August 2012, citing “sluggish” capital markets and low valuations of bank shares.

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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