Related News
Everbright Bank aims for US$7b in HK
By Samuel Shen and Kazunori Takada |
February 22, 2011, Tuesday
|
Print Edition
Print Edition
CHINA Everbright Bank may raise around US$7 billion through a share sale in Hong Kong just six months after its Shanghai IPO, leading the way for more fundraising by smaller banks.
Chinese banks are facing a tough time as the government has been aggressively tightening liquidity, with the latest being a rise in the reserve requirement ratio on Friday, to cool its red-hot economy and bring down stubbornly high inflation.
Those measures and the possible slowdown in China's economy could prod banks, especially smaller ones, to consider raising more money from the capital market.
Everbright Bank had already expressed its intention to sell H-shares, but the share sale plan announced on Monday caught many analysts by surprise as it comes only six months after the mid-sized Chinese lender's US$3 billion initial public offering on the Shanghai market.
"It is earlier than expected, as Everbright Bank should not be short of capital after last year's IPO," said Jin Lin, analyst at Orient Securities Co.
"This is a strategic move that would open a new channel of capital-raising for Everbright and shows that in the banking sector capital is the king. More cash enables companies to expand faster and make acquisitions easier," Lin added.
Last year, the bank joined China's biggest lenders such as Bank of China and China Construction Bank in a rush to raise funds to strengthen their balance sheets after a lending binge in 2009.
Mid-sized lenders such as China Merchants Bank and Shenzhen Development Bank, as well as dozens of city commercial banks may also look to raise more funds, he said.
Everbright Bank plans to sell up to 10.5 billion H-shares with an over-allotment of up to 1.5 billion shares, which would bring its total H-share issuance to as much as 12 billion.
Based on Friday's close of 3.97 yuan for the lender's Shanghai-traded A shares, Everbright Bank could raise around 50 billion yuan (US$7.6 billion) in Hong Kong before the over-allotment, according to Reuters' calculations.
But based on its IPO pricing in Shanghai in mid-August, the Hong Kong share sale would raise around US$5.7 billion.
"Proceeds from the H-share issuance will be used to supplement our core capital, increase capital adequacy ratios, improve our profitability, help us ward off future risks and support rapid development of our businesses," Everbright Bank said in a statement to the Shanghai Stock Exchange.
Chinese banks are facing a tough time as the government has been aggressively tightening liquidity, with the latest being a rise in the reserve requirement ratio on Friday, to cool its red-hot economy and bring down stubbornly high inflation.
Those measures and the possible slowdown in China's economy could prod banks, especially smaller ones, to consider raising more money from the capital market.
Everbright Bank had already expressed its intention to sell H-shares, but the share sale plan announced on Monday caught many analysts by surprise as it comes only six months after the mid-sized Chinese lender's US$3 billion initial public offering on the Shanghai market.
"It is earlier than expected, as Everbright Bank should not be short of capital after last year's IPO," said Jin Lin, analyst at Orient Securities Co.
"This is a strategic move that would open a new channel of capital-raising for Everbright and shows that in the banking sector capital is the king. More cash enables companies to expand faster and make acquisitions easier," Lin added.
Last year, the bank joined China's biggest lenders such as Bank of China and China Construction Bank in a rush to raise funds to strengthen their balance sheets after a lending binge in 2009.
Mid-sized lenders such as China Merchants Bank and Shenzhen Development Bank, as well as dozens of city commercial banks may also look to raise more funds, he said.
Everbright Bank plans to sell up to 10.5 billion H-shares with an over-allotment of up to 1.5 billion shares, which would bring its total H-share issuance to as much as 12 billion.
Based on Friday's close of 3.97 yuan for the lender's Shanghai-traded A shares, Everbright Bank could raise around 50 billion yuan (US$7.6 billion) in Hong Kong before the over-allotment, according to Reuters' calculations.
But based on its IPO pricing in Shanghai in mid-August, the Hong Kong share sale would raise around US$5.7 billion.
"Proceeds from the H-share issuance will be used to supplement our core capital, increase capital adequacy ratios, improve our profitability, help us ward off future risks and support rapid development of our businesses," Everbright Bank said in a statement to the Shanghai Stock Exchange.
- 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.
