Bank of Jiangsu eyes US$1.1b from IPO
Print Edition
BANK of Jiangsu plans to raise about 7.24 billion yuan (US$1.1 billion) through its initial public offering on the A-share market today, testing investors’ appetite for stocks heavily exposed to the country’s rising level of bad loans.
The regional bank plans to issue its IPO at a price of 6.27 yuan per share, according to a statement filed with the Shanghai Stock Exchange yesterday.
Besides Bank of Jiangsu, at least 14 other commercial banks have announced plans to float this year, including Bank of Shanghai, Bank of Guiyang and five other rural lenders from the Jiangsu Province.
The 14 lenders, if listed, can raise 72 billion yuan.
“It’s inevitable for lenders to go public,” said Jimmy Leung, banking and capital markets leader at PwC China.
“Less capital means less room for banks to create profit-driven products. The strict regulations force lenders to seek out more avenues for capital.”
Small lenders such as Bank of Jinzhou, Bank of Qingdao and Bank of Zhengzhou chose to sell shares in offshore market like Hong Kong. But their stocks remain a hard sell since domestic banks are facing tighter profit margins and increased capital pressure.
“Going public is not the cure-all medicine for lenders,” said an analyst at Bohai Bank, who preferred anonymity. “It might relieve the liquidity problem but it cannot solve their problems with rising bad loan ratio and their connection with a cooling economy. What they should do is introduce more fee-generating businesses to help their profit growth.”
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