Industrial Bank, in which Hang Seng Bank owns a minority stake, plans to enrich its capital before listing in the A-share market by raising four billion yuan from the sale of a form of upper tier-II bonds. The Fujian-based bank is the first Chinese lender to get approval from the country's banking regulator to sell this new type of bond, known as a hybrid capital bond in China, to institutional investors. The 15-year hybrid bonds combine fixed and floating rates. The bonds will help Fujian Bank raise its capital adequacy ratio, according to a statement on the website of China Government Securities Depository Trust & Clearing on Friday. Pricing will be set on Wednesday and a two-day issuing period will immediately follow. The minimum subscription is five million yuan. Because they are issued for periods longer than the usual five years, hybrid capital bonds allow investors to earn higher interest and give the banks an additional way to raise funds, Guotai Junan Securities said in a report in December last year. Chinese commercial banks, especially the non state-owned lenders, have been eager for additional channels to raise money to meet requirements of the China Banking Regulatory Commission that they enrich their capital. They have almost exhausted their quotas on other types of bonds. The CBRC issued guidelines in December that allowed banks to issue hybrid capital bonds. China Minsheng Bank also plans to raise 4.3 billion yuan through such bonds, while China Merchants Bank and Huaxia Bank are reported to be designing similar products. The statement said the bond sales would increase Industrial Bank's capital adequacy ratio to 9.75 per cent from 8.13 per cent last year. The minimum regulatory requirement is 8 per cent. The bank's core capital adequacy ratio will remain unchanged at 4.9 per cent against the minimum requirement of 4 per cent. The lender, which is planning a 10 billion yuan initial public offering in Shanghai, will allow buyers of the hybrid bonds to redeem them at face value after 10 years. In terms of precedence, the hybrid investors will come after holders of general bonds and long-term secondary bonds, the statement said. China Lianhe Credit Rating rated the bond as AA-minus, compared with the highest grade of AAA. Hang Seng Bank owns 16 per cent of Industrial Bank, the Singapore government holds 5 per cent and the World Bank's International Finance Corp holds 4 per cent. Guotai Junan Securities and China Jianyin Investment Securities are sponsoring the bond sales.