Bank of China Ltd (BOC) shares were halted from trading in Hong Kong after a report the nation's third-largest lender by value plans to raise as much as 60 billion yuan ($8.9 billion) in a stock offering to replenish capital.
The Beijing-based lender will offer the shares in Shanghai and Hong Kong, C aing.com reported on Thursday, without citing anyone. BOC is studying the next step of a fundraising plan approved by shareholders and will make an announcement "once there's concrete progress," a spokeswoman who declined to identify herself, citing company policy, said.
An offering would add to as much as $45.6 billion in fundraising announced by China's five biggest State-controlled banks after they extended record loans last year to support a government-led stimulus plan. For BOC, a stock sale would come a month after selling 40 billion yuan of bonds.
BOC has fallen 5.5 percent this year in Hong Kong, outperforming the 8 percent drop in the benchmark Hang Seng Index. In Shanghai, where trading wasn't suspended this morning, the stock rose as much as 1.2 percent to 3.43 yuan.
The lender's capital adequacy ratio fell to 11.09 percent as of March 31, below the minimum 11.5 percent required by the China Banking Regulatory Commission. BOC, which granted more loans than any rivals last year, in June completed the sale of 40 billion yuan of six-year bonds that can be converted into shares in six months after issuance.
Fundraising plans
Central Huijin Investment Co (Huijin), which owns 67.5 percent of BOC, did not take part in the bond sale. Huijin, which owns stakes in China's largest financial institutions, said in April it will participate in fundraising by BOC, Industrial & Commercial Bank of China Ltd (ICBC) and China Construction Bank Corp (CCB).
China's government has stepped up measures to drain liquidity on concern that last year's credit boom will create an asset bubble. Policy makers aim to cap new loans at 7.5 trillion yuan this year, down 22 percent from 2009, and have told banks to set aside more deposits as reserves three times since Jan. 1.
ICBC, CCB, BOC, and Bank of Communications Co, the nation's four-largest publicly traded banks, face about $70 billion in capital shortfall as they seek to comply with regulatory requirements and meet loan demand, ICBC President Yang Kaisheng wrote in an April article.
ICBC, the world's largest lender by market value, may sell 25 billion yuan of convertible bonds as soon as August, a person familiar with matter said last month. The bank also got a general mandate to sell stock equivalent to as much as 20 percent of outstanding shares in Shanghai and Hong Kong.
Beijing-based CBC, the world's second-largest by market value, last week won shareholder approval to raise up to 75 billion yuan in a rights offer. Agricultural Bank of China Ltd, the nation's largest lender by customers, is seeking to raise as much as $20.1 billion in an initial public offering in Shanghai and Hong Kong.