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September 19, 2009

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Lender considers options to raise funds

SHANGHAI Pudong Development Bank said yesterday it is considering sales of shares or bonds or a listing overseas to replenish capital that was squeezed by rapid credit growth this year.

The bank aims to have at least 115 billion yuan (US$16.8 billion) of new capital by next year, up from 78.8 billion yuan at the end of June, the lender said in a filing to the Shanghai Stock Exchange yesterday.

Its target for 2011 is set at 134 billion yuan.

"We will take initiatives to expand channels to boost our capital," the bank said in the filing.

The lender aims to get a capital ratio of 10 percent by 2010 and 2011.

Its capital adequacy ratio, the main measure of banks' financial strength, fell to 8.11 percent at the end of June after the bank ratcheted up its credit by 35 percent in the first half. The bank held the lowest capital ratio among listed banks.

Regulators adopted stricter measures this year to ensure China's record credit growth doesn't get out of control.

The regulator said earlier this month that it has curbed some joint stock banks from new credit expansion after their capital adequacy ratios fell close to the regulatory minimum of 8 percent.

Pudong Bank last month won regulatory approval for a share placement valued at up to 15 billion yuan. Its capital ratio may rise to 9.65 percent after the sale, still lower than the requirement imposed on listed banks.

Last year, China raised the minimum capital adequacy ratio for public banks to 10 percent from 8 percent. The ratio will be raised to 12 percent at the end of this year.


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