Update | BOC raises US$6.5b in offshore preferred share issue
Bank of China has raised US$6.5 billion in an offshore preferred share issue, boosting its capital adequacy ratio to meet international standards.
The shares marked the first hybrid securities issuance by a mainland firm.
Capital raised from the offering would be “wholly used to replenish the bank’s additional tier-1 capital and increase its capital adequacy ratio”, BOC said in a filing to the Hong Kong stock exchange.
The preferred shares will be settled at a non-cumulative dividend of 6.75 per cent.
The funds raised will be used to meet Basel III tier-1 capital requirements, a set of global standards for banks.
It is the first in several tranches of preferred shares from the BOC and the first in a wave of similar issuances worth about 310 billion yuan (HK$392.3 billion) from mainland banks.
Industrial and Commercial Bank of China and Agricultural Bank of China have received regulatory approval to issue preferred shares, a hybrid security that has characteristics of both equity and debt capital.
During the interim reporting season in August, mainland banks stressed their progress in meeting Basel III deadlines, in 2018 and 2019.
Buyers of the BOC issue were mainly domestic institutional investors, such as insurance companies, and international institutional investors, said Chen Xingyu, an analyst at Phillip Securities in Shanghai.
BOC was likely to issue more securities with the hope of boosting its capital adequacy ratio in line with international standards, Chen said.