China Banks Poised to Sell Preferred Stock to Buffer Capital

Industrial & Commercial Bank of China Ltd. and its competitors are poised to issue preferred shares as soon as this year to shore up finances as slowing profit growth curbs their ability to retain earnings as capital.

ICBC, China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd. said in the past week they’re preparing to sell the stock as they reported a combined 12 percent increase in 2013 profit, down from 15 percent a year earlier. Preferred stock, available under a trial approved by regulators last month, permits banks to raise capital without selling dilutive common equity. The shares can be converted into common stock if capital ratios fall below a certain level.