UPDATE 2-China banks eye cash calls; Beijing denies new rules

* CBRC seeks capital ratio of 13 pct for big banks - source

* Bank of China could need $15 bln cash call - sources

* CBRC denies seeking big bank 13 pct capital adequacy ratio

* Urges "stable, sustainable" lending by banks (Adds Chinese banker, analysts, regulator denial, details)

By George Chen

HONG KONG, Nov 23 (Reuters) - China's banking regulator wants big state lenders, including Bank of China (601988.SS) (3988.HK), to raise their capital adequacy ratios after a lending boom this year, according to a source with direct knowledge of the matter.

Beijing is pushing for a capital adequacy ratio -- a key measure of financial strength -- of 13 percent next year for big banks, the source said, up from a current 11 percent average. For all banks there is a minimum regulatory requirement of 8 percent.

The China Banking Regulatory Commission (CBRC), however, denied it was asking big banks to meet a 13 percent capital ratio. In a statement on its website it urged banks to lend at a "stable, sustainable pace" as it sought to avoid year-end lending volatility.

"As for media reports that the CBRC will control credit issuance by commercial banks and raise CAR to 13 percent for big banks, the CBRC has no such requirements," it said.

However, it added: "For those financial institutions in the banking sector that lack feasible plans for supplementing their capital, the CBRC will restrict their market access, investment, branch expansion and business expansion."

A senior executive at a major Chinese bank declined to confirm the new capital ratio guideline, but told Reuters some big banks have been in talks with investment banks for plans to seek additional capital.

"A new wave of fundraising by Chinese banks is forming," said the executive, who declined to be identified as he was not authorised to talk to the media.

Bank of China (601988.SS) (3988.HK), China Construction Bank (601939.SS) (0939.HK) and Bank of Communications (601328.SS) (3328.HK) have notified the regulator they are working on fundraising proposals to meet the new guideline, said the source.

Bank of China was already in talks with investment banks to raise money via new share issuance, two other sources familiar with the matter said on Monday, in what could be a $15 billion fundraising effort.

Goldman Sachs (GS.N), UBS (UBSN.VX) (UBS.N) and BOC International, the Hong Kong-based investment banking arm of Bank of China, handled Bank of China's Hong Kong listing in 2006.

If successful, that would be the world's sixth-biggest fund raising after UBS raised $15.7 billion in May 2008, according to Thomson Reuters data.

The sources were not authorised to speak publicly about the policy or the bank's plans because of the issue's sensitivity.

CASH CALL

Bank of China's current capital adequacy ratio is about 11 percent, with at least one analyst saying the ratio would likely fall to 10 percent next year.

"We expect BOC's aggressive loan growth to pull down its total ratio to about 10 percent at the end of 2010, which implies potential fundraising risks under stricter regulation," said BNP Paribas analyst Dorris Chan in a research note last week.

To meet a 13 percent guideline, Bank of China would have to raise around 100 billion yuan ($14.6 billion), sources said.

This year, Beijing has repeatedly warned domestic banks of the growing risks of over-extending domestic loans, and has moved to tighten lending policy in recent months. [ID:nPEK331573]

However, Beijing has to tread cautiously as many small- and medium-sized enterprises, which contribute more than half the country's economic growth, have complained about how tough it is to get bank loans.

"If Bank of China goes to raise 100 billion yuan, this would mean another 200-300 billion yuan of fund raising from other listed state lenders, and that would really scare investors," said Oriental Securities analyst Jin Lin.

BEIJING'S SUPPORT

Central Huijin Investments Co, a unit of China Investment Corp, the country's sovereign wealth fund, has agreed that Bank of China should raise more capital to support its business, said the sources.

Huijin, on behalf of the Chinese government, injected a combined $45 billion, part of China's foreign exchange reserves, into Bank of China and China Construction Bank at the end of 2003 as Beijing kicked off its nationwide banking reform.

That left Huijin as a controlling shareholder in many of the big banks, including Bank of China and China Construction Bank.

Management at China Construction Bank, led by Guo Shuqing, a former top foreign exchange regulator, is also seeking support from Huijin to raise new capital, said the sources.

Other second-tier Chinese banks are also facing pressure to raise capital for further loan expansion though the size of fund raising would be much smaller, analysts said.

On Monday, Industrial Bank (601166.SS), a mid-sized Chinese lender, said it would raise up to $2.64 billion in a rights issue to boost its capital adequacy ratio. [ID:nSHA230209] ($1=6.827 Yuan) (Editing by Michael Flaherty and Ian Geoghegan) (Additional reporting by Kennix Chim in HONG KONG, Michael Wei and Simon Rabinovitch in BEIJING and Samuel Shen in SHANGHAI) ((george.chen@reuters.com; +852 2843 6532; Reuters Messaging: george.chen.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))