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Pudong Bank gets nod to raise capital

SHAREHOLDERS of Shanghai Pudong Development Bank yesterday overwhelmingly gave the green light to its plan to raise a combined 30 billion yuan (US$4.4 billion) via bonds and new shares placement.

More than 99 percent of the shareholders approved the plan to sell 15 billion yuan of subordinated debt and raise up to 15 billion yuan from a private share placement at a shareholders' meeting yesterday in Shanghai.

"Capital raising is a priority for our bank now," Chen Xin, deputy chairman of the Shanghai-listed bank, said yesterday at the meeting.

The capital will help increase the lender's capital adequacy ratio, a main indicator of financial strength. The bank can invest more to expand its network with the boost in capital. The bank's capital adequacy ratio is slightly above the 8-percent regulatory minimum requirement by the end of the first quarter. Its core capital ratio is about 5 percent, slightly above the regulatory minimum of 4 percent.

But the bank lags the industry average for the capital adequacy ratio, which is about 12 percent, and the core capital ratio, which is about 7 percent.

Shanghai International Group, the investment arm of the Shanghai government and the biggest shareholder of the mid-sized bank, will buy new shares in the lender, said Ji Xiaohui, chairman of the bank and Shanghai International.

Pudong Bank shares were suspended from trading in Shanghai yesterday. The benchmark Shanghai Composite Index gained 0.29 percent to close at 2,567.34 points.


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