Bank of China hires 9 banks for Additional Tier 1

Tue Sep 2, 2014 3:51am EDT

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SINGAPORE, Sep 2 (IFR) - Bank of China has picked nine banks for its debut issue of offshore Additional Tier 1 preferred shares, according to a banker close to the deal.

The banks are Bank of China International, BNP Paribas, China Merchants Securities, Citigroup, Citic Securities International, Credit Suisse, HSBC, Morgan Stanley and Standard Chartered, the banker said. BOCI is leading the process.

Bank of China is aiming to wrap up the deal before the end of October, the source said. Multiple currencies are being considered, including US dollars, euros and offshore renminbi, he added.

The bank had earlier announced it would issue US$6.5bn (Rmb40bn) in AT1 instruments. The terms are still being finalized.

"We are spending time to get the structure right," the source said. The price talk is for a yield in the range of 6.5%-7%.

Total AT1 issuance from China's 16 leading banks should exceed US$100bn eventually based on 1% of their risk-weighted assets, Morgan Stanley said in an August 22 report. If the AT1s are well received, Morgan Stanley's "bull case" is they fetch yields of 6%-7%. However, the fair value yield should be closer to 7%-8%, according to the Morgan Stanley report. (By Lianting Tu. Editing by Abby Schultz.)

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