BOC’s US$6.5b deal to meet Basel III
Print Edition
THE Bank of China yesterday sold US$6.5 billion in contingent capital, launching a critical wave of fundraising by China’s biggest banks as they boost their balance sheets to meet new global bank capital rules.
It is the first time a Chinese bank has issued so-called additional Tier 1 preference shares, instruments which behave like bonds and turn into common equity if the bank’s core capital falls below certain trigger ratios.
It is also the world’s largest-ever contingent capital deal, beating a US$5.6 billion deal by HSBC in September.
As growth slows and bad debts build up, China’s banks are rushing to replenish their balance sheets to meet the tough new global bank capital regulations known as Basel III.
This deal follows a wave of similar issuance by European banks earlier this year.
China’s four biggest lenders may issue US$20 billion worth of additional Tier 1 and Tier 2 capital by the end of the year, according to Fitch Ratings.
China has been rigorously enforcing Basel III regulations in its efforts to ward off a financial crisis following a huge run-up in debt since 2008 and a marked slowdown in the economy.
BOC said the preference shares would yield 6.75 percent, within the range expected by investors. Investors in these kind of preference shares demand a premium over straight bonds from the same issuer, for the extra risk their securities may be turned into common shares in times of stress for the bank.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
