AgBank rises on plan to issue preference shares
Print Edition
SHARES of the Agricultural Bank of China rose yesterday after the country’s third-biggest lender said it plans to issue up to 800 million preference shares on China’s mainland to replenish capital.
AgBank gained 0.4 percent to 2.40 yuan (39 US cents) in Shanghai yesterday, while the Shanghai Composite Index shed 0.2 percent.
According to its filing to the Hong Kong stock exchange, the bank plans to raise no more than 80 billion yuan from fewer than 200 investors via a private placement.
The stock sale may boost AgBank’s core Tier-1 capital ratio to 10.7 percent this year, and 10 percent in the next two years, Beijing Gao Hua Securities Co, a subsidiary of Goldman Sachs, said in a report yesterday.
AgBank has the lowest capital adequacy ratio of 11.9 percent and Tier-1 ratio of 9.5 percent at the end of March among China’s top-five banks.
Companies in China have been allowed to raise funds via preferred shares under a trial program that financial regulators started two months ago.
Preferred shareholders have a higher claim on a company’s assets and earnings than common stockholders. They receive dividends before common shareholders do but banks can cancel dividend payment to preferred shareholders under any circumstances.
Preferred shareholders don’t have voting rights.
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