A proposal by Dah Sing Financial and separately listed Dah Sing Banking to raise a combined HK$2.2 billion in two rights issues has puzzled analysts, who say the bank's capital adequacy ratio is well above industry levels. 'They're either being too conservative or they see potential to expand,' said Joseph Leung of JP Morgan Chase. Dah Sing Bank said its local loan growth exceeded 20 per cent in the first nine months compared with the end of last year. The bank also expanded into the provision of yuan products. Dah Sing said it made the decision to raise the fresh capital to meet Basel III requirements and also to create a capital buffer to support growth in Hong Kong, Macau and on the mainland. 'We have adequate capital at this moment,' said Gary Wang, finance director of Dah Sing Bank. 'Our capital adequacy ratio was at 17.2 per cent as of the end of June.' Abundant liquidity in the market and a generally positive sentiment were also relevant considerations, he said. The group's share prices remained steady for the first two days after its rights issue announcement. Louis Wong Wai-kit, director of Phillip Capital Management, said Dah Sing's share price might still be under pressure in the near term because shareholders who do not want to buy more shares may choose to sell. Upon completion of the issue, Wang expects Dah Sing Banking's core capital and total capital to increase by 1.2 per cent each. Dah Sing Bank's tier one capital already exceeds the requirements of Basel III, having reached 10.7 per cent by the end of June. Basel III regulation states that top-quality capital should total 7 per cent of risk-bearing assets by 2019. Dah Sing Financial Holdings priced its issue at a 40 per cent discount, and Dah Sing Banking priced its issue at a 40.9 per cent discount based on the share prices of November 16. Dah Sing's move to raise capital follows HSBC, Standard Chartered, and several other mainland banks, but Wang said this did not place Dah Sing at a disadvantage. 'We are not on the same playing field. HSBC is a global bank and we're more of a local bank.' More importantly, Dah Sing has a single large stakeholder, David Wong Shou-yeh. The fact that Wong gave his full support to the rights issue, agreeing to buy 12.6 million rights shares, makes it much easier to raise capital, said Wang. Wong owns a 40 per cent stake in Dah Sing Financial Holdings.