Banking
Bank of Ningbo to raise 5b yuan
By Wang Bo (China Daily)
Updated: 2009-10-14 08:07
Bank of Ningbo Co, a Zhejiang-based regional lender part-owned by Singapore's Overseas-Chinese Banking Corp, plans to raise as much as 5 billion yuan ($732 million) in a private placement to augment its capital base, the bank said in a filing to the Shenzhen bourse Tuesday.
The bank announced that it would sell up to 450 million shares at 11.63 yuan per share to its existing shareholders who owned at least 5 percent of the lender. The share sale will be subject to a lockup period of three years.
Youngor Group Co, a major domestic garment producer that owns 7.2 percent of the bank, said in a separate statement that it would buy up to 71 million shares through the private placement.
Fu Lichun, a banking analyst at Southwest Securities, said the share sale was a shot in the arm for the bank, and could help support its development over the next two to three years.
"Chinese regional lenders have entered into a phase of rapid expansion, which demands a more solid capital base to support their development," Fu said.
With lending growing at over 30 percent in the first half, Bank of Ningbo has seen its capital adequacy ratio drop to 12.84 percent at the end of June, from 16.15 percent six months ago.
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With the mainland stock market rebounding 47.5 percent this year and showing a bullish trend, many believe it is a good fund raising opportunity. Bank of Ningbo has followed other domestic lenders, such as China Merchants Bank and Shanghai Pudong Development Bank, to raise funds in an effort to replenish their capital drained by rapid lending in the first half.
The bank's share gained 1.86 percent yesterday on the share sale news, closing at 13.69 yuan.
