Ping An Bank to raise 5b yuan in share sale

PUBLISHED : Friday, 14 August, 2009, 12:00am
UPDATED : Friday, 14 August, 2009, 12:00am

Shenzhen-based Ping An Bank plans to raise five billion yuan (HK$5.67 billion) through an allotment of shares to shareholders, including 4.5 billion yuan from major stakeholder Ping An Insurance (Group).

The support from the mainland's second-largest insurer is aimed at lifting the lender's capital adequacy ratio to the regulator's requirement, according to Sheng Ruisheng, a spokesman for the insurer.

Ping An Bank, a small lender with ambitious expansion plans, may have seen its ratio improve from 10.69 per cent at the end of last year to 11 per cent after it issued three billion yuan of subordinated bonds in June, analysts estimate.

Mr Sheng yesterday said the placement, when completed next month, should further increase the ratio to almost 15 per cent, higher than the 12 per cent set by the China Banking Regulatory Commission for small and medium-sized lenders.

The regulator raised the threshold from 10 per cent earlier this month, fearing small lenders' capability to cushion risks amid the economic downturn. A lending frenzy in the first half saw banks make a record 7.37 trillion yuan of new loans, triple the amount a year ago.

As lending surged, banks' capital adequacy ratios, a gauge of their capability to withstand losses, fell.

Banks have been flooding debt markets and issuing subordinated bonds to replenish capital this year. But the regulator is soliciting opinion for a new rule under which part of the funds raised from the debt issue will not be calculated into capital.

China Merchants Securities analyst Hong Jinping said the placement would be a wise investment for the insurer. 'The share placement price is very attractive,' she said.

The bank said it would issue 5.79 shares for every 10 shares held by existing shareholders at 1.58 yuan each, equal to its net asset value per share at the end of last year.