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November 25, 2009

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BOC has plans to raise capital

THE Bank of China yesterday said it had various plans to raise capital to sustain stable growth.

The bank has no details to disclose now, it said, a day after the China Banking Regulatory Commission denied that it was asking big banks to meet a 13-percent capital adequacy ratio.

The Beijing-based bank's capital ratio dropped to 11.63 percent at the end of September, from 13.43 percent at the end of last year.

The top banking authority already requires a capital adequacy ratio of 10 percent on listed banks while the minimum requirement on banks is set at 8 percent.

The top banking regulator on Monday said it asked banks to tighten inspections on lending this year on concerns that such a rapid credit boom may harm the industry's health.

The top banking regulator said banks with low capital adequacy ratio and no plans to remedy the issue would face restrictions on overseas investment and business expansion.

The Bank of China, the country's third-biggest bank, said it respects the regulators' requirements on capital and will improve its capital planning.

Several listed banks, including the Industrial Bank and China Minsheng Banking Corp, have disclosed plans to sell additional shares or make rights issues to replenish capital against the backdrop of a tide of credit this year.

In the first 10 months, banks in China have issued 8.92 trillion yuan (US$1.3 trillion) of local-currency loans, up 5.26 trillion yuan from a year ago. It already surpassed the 5 trillion yuan target for 2009 set at the beginning of this year.

The tide of new credit has pumped up China's economic growth against the backdrop of global slowdown but also pushed banks to raise capital to sustain a steady and healthy loan growth.

The Bank of China shares lost 2.3 percent in Shanghai yesterday.


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