TEXT-S&P Bulletin: Bank of Communications rtg unchanged by share private placement

(The following was released by the rating agency)

HONG KONG (Standard & Poor's) March 16, 2012--Standard & Poor's Ratings Services said today that its ratings on Bank of Communications Co. Ltd. (BoCom: A-/Stable/--; cnAA/-/-) were not affected by the bank's proposed private placement of common shares of up to Chinese renminbi 56.6 billion.

The expected proceeds would significantly enhance the bank's capital base. Nevertheless, we view the proposed issue as a neutral factor for the ratings because we expect BoCom's risk-adjusted capital (RAC) ratio before adjustments for diversification to stay within a 6%-7% range over the next two years.

This RAC range would continue to indicate a "moderate" capital and earnings level as per our bank rating criteria. Net proceeds from the proposed private placement would represent as much as 21% of BoCom's shareholders' equity at Sept. 30, 2011. According to the bank, its tier one capital ratio would be about 10% after the private placement, compared to 9.24% at Sept. 30, 2011. This suggests continued robust asset expansion at the bank.

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