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Pudong bank aims for US$4.4b in new capital

SHANGHAI Pudong Development Bank Co yesterday said it planned to sell bonds and place new shares to raise a combined 30 billion yuan (US$4.4 billion) to shore up its financial strength.

Its board of directors has decided to sell 15 billion yuan of subordinated debt, according to a filing sent to the Shanghai Stock Exchange. The bond will bear a life of more than five years, with the interest rate still to be decided.

The Shanghai-based lender also plans to raise up to 15 billion yuan from a private share placement. The offering price will be no less than 90 percent of its average share price for the past 20 trading days. The new placement will be no more than 20 percent of its existing shares and will be issued to at most 10 institutional shareholders or insurance companies. The share-selling plan still needs the approval of the China Banking Regulatory Commission and the China Securities Regulatory Commission.

The capital will add to the bank's core assets and strengthen its ability against risks and its profitability, the bank said.

The capital will help increase the lender's capital-adequacy ratio, a main indicator of financial strength. The bank's capital adequacy ratio sat at 9.06 percent by the end of last year, slightly above the 8-percent minimum regulatory requirement.

The bank said in a separate statement that its net profit surged 127.61 percent last year to 12.5 billion yuan, or 2.20 yuan per share. Total assets rose to 1.31 trillion yuan at the end of last year, up 43.11 percent from the previous year.

Its non-performing loan ratio decreased 0.25 percentage points to 1.21 percent at the end of last year. But it was up 0.02 percentage points than the figure at the end of September.

"The net interest margin dropped in the fourth quarter as non-performing loans added, but the increase of new loans continued and this is likely to continue in 2009," according to a research note by Changjiang Securities.

The bank's shares gained 0.86 percent to 22.22 yuan yesterday, while the benchmark Shanghai Composite Index rose 2.7 percent to 2,444.23, the highest close in nearly eight months.


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