Beijing-controlled Citic Ka Wah Bank has unveiled a HK$15 billion funding programme that could put it firmly in the running to win the bidding war for First Pacific Bank (FPB). Backed by a panel of heavyweight dealers that include HSBC, BNP Paribas, Standard Chartered Bank and UBS Warburg, a portion of the long-term facility could be used for issuing subordinated debt to help fund the bid. Analysts greeted this prospect last night with comments that it would allow Citic Ka Wah to pay for First Pacific Bank without issuing equity - which in turn could lift its present return on equity of below 10 per cent to the mid-cap average of about 15 per cent. 'If that were the case, we would certainly look to review our present neutral rating on the stock,' one analyst said. 'It looks as though they are putting the borrowing into place so that if they win the bidding for FPB, they could just push the button,' another said. Citic Ka Wah, together with Bank of East Asia, are rumoured to be among the front-runners in the bidding for a combined stake of about 75 per cent held in First Pacific Bank by listed First Pacific Co (51 per cent), and China metals trader Mimet (24 per cent). If a bid were successful and minorities were mopped up in the general offer that would follow, the price attached to First Pacific Bank would probably be somewhere around its present market capitalisation of HK$3.49 billion. But if the rumoured bid was partly motivating the funding line announced yesterday, newly appointed Citic Ka Wah treasurer Moses Yeung was not saying so during an interview with Business Post. 'The facility is meant to be 'evergreen',' Mr Yeung said. 'That means we are willing to borrow up to that ceiling only when the time is right and the moment is right and the creativity of this programme is that it is not driven by a funding need. 'We do not need the money now. We are flush with funds and are net lenders in the interbank market.' Mr Yeung added that the twofold objectives of the funding programme were to establish flexibility and credibility in the marketplace. 'What we are trying to do is create a very flexible mechanism for a [Certificate of Deposit] issuing facility,' he said. 'The mechanism is very simple. The dealer panel, the arrangers, and Ka Wah Bank say we agree to co-operate - when the price is right. 'It is an expression first of all of the agreement of an intention by Citic Ka Wah in terms of fund raising. Also it is an expression of Ka Wah's capability of raising that amount of funds.' Mr Yeung said the signal this sent to the market was that Citic Ka Wah had the capacity to raise such an amount, and also that the dealer panel and arrangers thought such a fund-raising programme was appropriate. 'It shows that it is do-able,' he said. Mr Yeung said later that analysts were entitled to read into the programme what they wished. 'I am not raising funds for specific projects . . . I am putting funding in place for a five-year expansion programme for the bank,' he said. But those comments failed to hose down the market interpretation that the funding facility was being put in place to help pay for a bid to take over First Pacific Bank. Citic, or China International Trust and Investment Corp, which holds 55.25 per cent of Citic Ka Wah Bank, is one of the mainland's leading investment companies and falls under the direct control of the State Council. In 1985, Citic came to the rescue of Ka Wah Bank, as it was then known, with a HK$350 million cash injection, which made it the major shareholder. More recently, the bank has been on a strong recovery trail and has been aggressively growing its asset base in Hong Kong, expanding first into the mortgage lending market and now into consumer banking. Early next year it plans to launch its first credit cards. Last month, Citic chairman Wang Jun said the group planned to speed up injecting assets into its Hong Kong arm, Citic Pacific, as part of a proposed overhaul of the group's diversified businesses in the SAR. A key objective of the overhaul would be to place greater emphasis on the group's core businesses, including its finance and banking operations.