By George Chen
BEIJING, March 11 (Reuters) - Bank of China , one of the country's Big Four state lenders, said it wants to issue more shares in Hong Kong soon, an offering that could strengthen its balance sheet by some $7.7 billion.
Many of China's big banks are tapping debt and equity markets for funds after a lending spree last year to support Beijing's economic stimulus left their capital ratios under pressure and fanned worries about bad loans.
Bank of China, which is also listed in Shanghai, said the follow-on offer of Hong Kong-listed H-shares would be 20 percent of its H-share capital.
Based on Thursday's market price in Hong Kong, the planned new share offering could be worth about HK$60 billion ($7.7 billion), making it the biggest fund-raising plan in Hong Kong so far this year, according to Reuters calculations.
Hong Kong-listed companies usually offer a discount of 5-10 percent to the current share price when they issue new shares.
'We want to do it as soon as possible but we will also have to find a good timing to make it happen,' Xiao Gang, the chairman of Bank of China told a media briefing in Beijing.
'The board has approved the plan and now we need to seek approvals from our shareholders as well as the regulators in both Hong Kong and Beijing for our new share issuances,' he said.
Analysts briefed by the bank in January had said Bank of China was considering a new share sale in Hong Kong to raise capital, supplementing plans for a convertible bond issue of up to 40 billion yuan ($5.86 billion) to shore up its capital base and maintain its lending capacity.
'I can see popular demand for the sale of our 40 billion yuan of convertible bonds. Yes, it is a big number but I think it is okay for China's big market to absorb it,' Xiao said
'In the long run, the planned new H-share issuance as well as the convertible bond sale, will do good to our business as we can then shore up our capital base very efficiently,' he added.
Chinese authorities have recently reined in credit and new lending posted a sharp drop in February.
Xiao said earlier this week that he saw new loans growth at around 10 percent this year and the bank had no other fundraising plans in the A-share market after its planned convertible bond issue.
Bank of China's H-shares fell 1.5 percent in a Hong Kong market up 0.2 percent. Its Shanghai shares rose 0.7 percent.
INTERNATIONAL BUSINESS
Bank of China is the country's fourth-largest lender by assets and the biggest foreign exchange lender. For historic reasons, it also operates the biggest branch network worldwide among all Chinese banks.
Bank of China has set up its wholly-owned and locally incorporated unit in Britain in an effort to boost its international business, especially to help Chinese companies finance their global mergers and acquisitions.
Xiao noted Bank of China has helped a number of Chinese resources companies finance their investments abroad in the past year and such business will remain a focus this year, as part of its plan to maintain its leading position among Chinese banks for international business.
'International business is our expertise for a long time and we want to keep it and make it stronger,' Xiao said.
'Rather than acquire or invest in a foreign company, we like to strengthen and boost our own global network first,' he said when asked for comments on the bank's 2010 global M&A strategy.
Xiao said Bank of China aims to keep its international revenue at more than 20 percent of the total in the next few years, though the weighting of its international revenue to total revenue is slowing due to faster expansion of its domestic business, thanks to China's strong economic growth.
Xiao said the bank has no plans to buy British interdealer broker Tullett Prebon or other foreign firms now.
Tullett Prebon said on Wednesday it was in preliminary talks that might lead to an offer, after UK newspaper The Daily Mail reported market rumours that Australia's Macquarie Group and Bank of China were interested in Tullett.
($1=6.825 Yuan)
(Additional reporting by Samuel Shen in SHANGHAI, Xie Heng and Michael Wei in BEIJING and Kennix Chim in HONG KONG; Editing by Lincoln Feast)
((george.chen@reuters.com; +852 2843 6532; Reuters Messaging: george.chen.reuters.com@reuters.net)) Keywords: BANKOFCHINA/SHARES (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BEIJING, March 11 (Reuters) - Bank of China , one of the country's Big Four state lenders, said it wants to issue more shares in Hong Kong soon, an offering that could strengthen its balance sheet by some $7.7 billion.
Many of China's big banks are tapping debt and equity markets for funds after a lending spree last year to support Beijing's economic stimulus left their capital ratios under pressure and fanned worries about bad loans.
Bank of China, which is also listed in Shanghai, said the follow-on offer of Hong Kong-listed H-shares would be 20 percent of its H-share capital.
Based on Thursday's market price in Hong Kong, the planned new share offering could be worth about HK$60 billion ($7.7 billion), making it the biggest fund-raising plan in Hong Kong so far this year, according to Reuters calculations.
Hong Kong-listed companies usually offer a discount of 5-10 percent to the current share price when they issue new shares.
'We want to do it as soon as possible but we will also have to find a good timing to make it happen,' Xiao Gang, the chairman of Bank of China told a media briefing in Beijing.
'The board has approved the plan and now we need to seek approvals from our shareholders as well as the regulators in both Hong Kong and Beijing for our new share issuances,' he said.
Analysts briefed by the bank in January had said Bank of China was considering a new share sale in Hong Kong to raise capital, supplementing plans for a convertible bond issue of up to 40 billion yuan ($5.86 billion) to shore up its capital base and maintain its lending capacity.
'I can see popular demand for the sale of our 40 billion yuan of convertible bonds. Yes, it is a big number but I think it is okay for China's big market to absorb it,' Xiao said
'In the long run, the planned new H-share issuance as well as the convertible bond sale, will do good to our business as we can then shore up our capital base very efficiently,' he added.
Chinese authorities have recently reined in credit and new lending posted a sharp drop in February.
Xiao said earlier this week that he saw new loans growth at around 10 percent this year and the bank had no other fundraising plans in the A-share market after its planned convertible bond issue.
Bank of China's H-shares fell 1.5 percent in a Hong Kong market up 0.2 percent. Its Shanghai shares rose 0.7 percent.
INTERNATIONAL BUSINESS
Bank of China is the country's fourth-largest lender by assets and the biggest foreign exchange lender. For historic reasons, it also operates the biggest branch network worldwide among all Chinese banks.
Bank of China has set up its wholly-owned and locally incorporated unit in Britain in an effort to boost its international business, especially to help Chinese companies finance their global mergers and acquisitions.
Xiao noted Bank of China has helped a number of Chinese resources companies finance their investments abroad in the past year and such business will remain a focus this year, as part of its plan to maintain its leading position among Chinese banks for international business.
'International business is our expertise for a long time and we want to keep it and make it stronger,' Xiao said.
'Rather than acquire or invest in a foreign company, we like to strengthen and boost our own global network first,' he said when asked for comments on the bank's 2010 global M&A strategy.
Xiao said Bank of China aims to keep its international revenue at more than 20 percent of the total in the next few years, though the weighting of its international revenue to total revenue is slowing due to faster expansion of its domestic business, thanks to China's strong economic growth.
Xiao said the bank has no plans to buy British interdealer broker Tullett Prebon or other foreign firms now.
Tullett Prebon said on Wednesday it was in preliminary talks that might lead to an offer, after UK newspaper The Daily Mail reported market rumours that Australia's Macquarie Group and Bank of China were interested in Tullett.
($1=6.825 Yuan)
(Additional reporting by Samuel Shen in SHANGHAI, Xie Heng and Michael Wei in BEIJING and Kennix Chim in HONG KONG; Editing by Lincoln Feast)
((george.chen@reuters.com; +852 2843 6532; Reuters Messaging: george.chen.reuters.com@reuters.net)) Keywords: BANKOFCHINA/SHARES (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.