Bank of China Said to Issue 32 Billion Yuan of Preferred Shares

Bank of China Ltd., the nation’s fourth-biggest lender by market value, sold 32 billion yuan ($5.2 billion) of preferred securities to yield 6 percent, two people with knowledge of the matter said.

The private placement took place today, the people said, asking not to be identified because the issue hasn’t been made public. Bank of China said in September it won regulatory approval to sell as much as 600 million preferred shares, with the first batch of 320 million to be completed within six months, according to a statement posted to the Shanghai Stock Exchange.

The issuance will help Beijing-based Bank of China shore up its capital buffers after Chinese lenders’ bad loans jumped by the most since 2005 in the third quarter. Bank of China raised $6.5 billion last month selling additional Tier 1 securities in Asia’s largest ever note offering denominated in U.S. dollars.

Officials at Bank of China’s press department didn’t immediately respond to a telephone call seeking comment on the latest sale.

Nonperforming loans rose by 72.5 billion yuan from the previous quarter to 766.9 billion yuan as of Sept. 30, the China Banking Regulatory Commission said in a statement Nov. 15. The central bank has provided cash to individual lenders to support growth, while avoiding any across-the-board cut in interest rates or reserve requirements.

Bank of China’s net income for the three months through September increased 4.9 percent to 41.4 billion yuan from 39.5 billion yuan a year earlier, according to an Oct. 30 Hong Kong exchange filing.

— With assistance by Xize Kang, Laura Yin, and Judy Chen

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