Bank of Shanghai eyes HK offering

PUBLISHED : Monday, 12 March, 2012, 12:00am
UPDATED : Monday, 12 March, 2012, 12:00am


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The Bank of Shanghai has shelved its plan to list in Shanghai and is looking at selling shares in Hong Kong instead, according to three people with knowledge of the matter.

The lender's top management including newly appointed chairman Fan Yifei - who is also an executive vice-president of sovereign wealth fund China Investment Corp - had informed middle-level managers of the Hong Kong listing plan, the sources say.

The Hong Kong initial public offering plan comes as the nation's second-largest commercial lender steps up efforts to replenish its capital to meet regulatory requirements.

It also follows a change in the shareholding structure that saw the mainland's sovereign wealth fund take a controlling stake.

The decision to turn to Hong Kong for the fund-raiser comes as a surprise as the bank had filed its listing application to the China Securities Regulatory Commission last year.

CIC recently bought a 7 per cent stake in the bank from International Finance Corp (IFC), the World Bank's private investment arm, before Fan was appointed to head the lender, replacing Ning Liming, according to the sources.

HSBC has an 8 per cent holding in the Shanghai bank.

A bank official did not deny the management reshuffle had taken place and said 'relevant information' would be made public when the lender published its annual report for last year.

IFC said in August that it was working with the bank to look for a new partner that could help increase its valuation. Analysts said it was a rare move by the sovereign wealth fund to appoint an executive to oversee the daily operations of an invested business.

'CIC certainly has the overseas resources to facilitate a listing in Hong Kong,' MasterLink Securities analyst Rainy Yuan said. 'The only sticking point is that mainland city commercial banks are now as well received in Hong Kong as the biggest state-owned rivals.'

Bank of Shanghai reported a tier-1 capital adequacy ratio of 8.44 per cent in June last year, below the required 8.5 per cent. The ratio measures the bank's core equity capital - usually stock and reserves - against its total assets.

Bank of Shanghai had planned to sell 1.2 billion A shares in 2010 to raise about 15 billion yuan (HK$18.4 billion).

The sources said the company would still proceed with its A-share plan following its listing in Hong Kong.

Bank of Shanghai was among 515 companies that applied to list on the mainland, according to a list released by the China Securities Regulatory Commission last month.

The bank earned 2.8 billion yuan in the first half of last year, up 10.1 per cent from a year earlier.

560b yuan

The value of Bank of Shanghai's total assets at the end of 2010, in yuan