Shenzhen bank plans to issue yuan bonds
(Shenzhen Daily)Updated: 2007-06-18 08:47 Shenzhen Development Bank, a mid-sized Shenzhen-listed lender, said Saturday that it plans to issue subordinated and hybrid bonds to raise up to 16 billion yuan (US$2.10 billion) to boost its capital.
The bank plans to issue a yuan-denominated subordinated bond with maturity between 5 and 15 years in the domestic interbank market to raise 8 billion yuan, according to its stock filing.
Shenzhen Development Bank, nearly 18 percent owned by U.S.
investment firm Newbridge Capital, also said it plans to issue a hybrid bond
with the same maturity as its subordinated bond to raise another 8 billion yuan
to boost its capital adequacy ratio.
The bank's capital adequacy ratio was just 3.71 percent at the end of 2006, below the minimum regulatory requirement of 8 percent.
The bond issuances were approved by the bank's board but still need shareholders' votes and regulatory approval, it said.
After a delay of nearly a year, shareholders in Shenzhen Development Bank last week approved a plan to reform its shareholding structure, clearing the way for the bank to raise fresh capital to support its rapid growth.
A shareholders' meeting had almost unanimously approved a revised, more generous plan to compensate public shareholders for the reform.
The bank offered a 1-for-10 bonus issue of shares as well as 1.5 warrants for every 10 shares held. Each warrant will let shareholders buy a Shenzhen Development Bank share at 19 yuan, a 34 percent discount from the last traded market price of 28.69 yuan.
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The bank is one of a small number of listed firms that have not completed the nationwide market reform, which converts non-tradable shares owned by the State into tradable shares.
The delay has prevented the bank from raising fresh capital and proceeding with a deal, agreed in 2005, for a unit of General Electric to buy a 7.3 percent stake in the Shenzhen-based bank for US$100 million.
It is uncertain now whether GE will go ahead with its plans to invest in the bank.
Shenzhen Development Bank shares have been suspended since the end of last month, pending the shareholders' meeting. The bank said it expects to resume stock trading June 20.
The bank said March 21 that its 2006 profit more than quadrupled as it increased loan margins and cut provisions for bad debt.
Net income climbed to 1.3 billion yuan (US$168.1 million), or 0.67 yuan a share, from 311 million yuan, or 0.16 yuan a share, the bank said.
Net operating income jumped 31 percent to 7.14 billion yuan. The bank's
credit provisions fell 21 percent last year from a year earlier and its bad-loan
ratio fell to 8 percent last year, from 9.3 percent in 2005. Shenzhen
Development's deposits rose 15 percent in 2006 from a year earlier, while
lending increased 17 percent.
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