Banks decide against launching warrants

A clutch of banks have pulled plans to sell warrants linked to the shares of Industrial and Commercial Bank of China tomorrow on concerns that an influx of warrants may increase the stock's volatility.

'ICBC has said it doesn't want an adverse or unnatural impact on trading,' said a person familiar with the situation.

DBS, Morgan Stanley, Goldman Sachs, JP Morgan, Macquarie, BNP Paribas and HSBC were among the banks forming the group of IPO syndicate banks caught out by the move which was decided on Monday.

Other banks such as Citigroup and Societe Generale could conceivably sell warrants, market sources said. But Macquarie and BNP plan to still go head to issue the ICBC warrants as planned, they said. Macquarie declined to comment. BNP could not be reached.

ICBC's listing will be the first time the Hong Kong stock exchange has allowed warrants to be launched on the same day as a stock's trading debut after criticism that Singapore Exchange, which allows the practice, is poaching business from the city.

'Most people would say warrants are positive because you have to buy the stock to hedge your exposure but ICBC and its legal counsel are afraid of the volatility,' a banker said.