Hong Kong’s Hang Seng Bank, a unit of HSBC Holdings, has agreed to sell a 5% stake in China’s Industrial Bank for CNY12.73bn ($2.04bn).
The move is targeted at improving Hang Seng’s regulatory capital position.
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The transaction will include sale of 952.6 million shares of Hang Seng to domestic and global institutional investors at CNY13.36 per unit. The share sale will be managed by Goldman Sachs Gao Hua Securities.
Following the share sale, Hang Seng’s stake in Industrial Bank will drop to 5.87%.
The bank acquired a 15.98% stake in Industrial Bank for CNY1.7bn in 2004, but its shareholding declined after a private placement in 2013.
The share sale is projected to boost the bank’s common equity tier 1 (CET1) and tier 1 capital ratios by nearly 2.3 percentage points and the total capital ratio by about 3.8 percentage points.
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By GlobalDataAs of 30 June 2014, the lender’s CET1 and tier 1 capital ratios both stood at 11.8% while the total capital ratio was 14.2%.
