Citic Bank Plans to Sell Up to $5.6 Billion of Preferred SharesBonnie Cao
China Citic Bank Corp, a unit of the nation’s largest state-owned investment firm, said it plans to replenish its capital by selling as much as 35 billion yuan ($5.6 billion) of preferred stock.
The bank will sell as many as 350 million preferred shares in a private placement in China, according to a Shanghai stock exchange filing on Friday. The plan requires approval from shareholders and regulators, it said.
Citic Bank is boosting its capital after China introduced stricter requirements in January 2013, adding to challenges for a banking industry facing slower profit growth and rising bad debts.
Preferred securities sold by Chinese banks are compulsorily converted into common stock if capital ratios fall below a certain level. For Citic Bank, the trigger is when the core Tier-1 ratio drops to 5.125 percent or less, according to the statement.
The bank’s net income rose to 40.7 billion yuan last year from 39.2 billion yuan in 2013, according to a separate statement on Friday.