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September 27, 2016

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Home » Business » Finance

Bank of Shanghai gets nod for city IPO

Source: Xinhua | September 27, 2016, Tuesday | Print Edition

BANK of Shanghai has been given permission for an IPO on the Shanghai Stock Exchange, the latest of China’s small and medium-sized lenders to go public after nearly a decade of approval suspension.

According to the bank’s prospectus, it planned to raise at least 19 billion yuan (US$2.9 billion) to replenish capital. The figure is likely to be at least halved as the China Securities Regulatory Commission only green-lighted a total of 15.5 billion yuan for the bank and 11 other companies.

Annual profits of Bank of Shanghai, the second-largest city commercial bank in China, have grown by an average of more than 20 percent for the last four years. It also owns four village banks, a funding firm and a branch in Hong Kong.

China’s city banks were formerly urban credit cooperatives, and unlike big commercial banks, they mainly serve small businesses and the regional economy.

Bank of Shanghai first applied for an IPO in 2008, but the procedure was suspended that year due to fears that such banks, often with poor risk control, may weigh on an A-share market that was already struggling. Frustrated by the restriction, many city banks turned to the Hong Kong market.

Approval resumed this year and, in June, Bank of Jiangsu was the first city bank allowed to go public for eight years. Bank of Shanghai will be the fourth, and many more are still waiting for approval.

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