Bank of China is intending to raise as much as CNY100 billion ($16 billion) by selling up to 400 million preferred shares in a bid to address its tough capital issues.
The bank’s board has approved sale of up to 600 million preferred shares through private transactions in the country. The move comes two months after Chinese government opened domestic securities market, reported Bloomberg.
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Bank of China’s Tier-1 ratio dropped to 9.59% during the quarter ended 31 March 2014, from 9.7% in December 2013, alongside its total financial buffer that fell to 12.05% from 12.46%.
Heavy funds are expected to resurrect the banking regulator’s minimum Tier-1 ratio of 9.5% and a total ratio of 11.5% by the end of 2018.
The Chinese government had introduced new regulations earlier in 2013, because of which the four big banks of China – Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China are expected to fall short of $38 billion in capital by 2019.
Earlier during the month, the Agricultural Bank of China has announced its plans to raise CNY80 billion (US$12.8 billion) from private sales of preferred shares on the mainland, while Shanghai Pudong Development Bank intends to secure CNY30 billion ($4.8 billion).
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