HONG KONG May 8 Agricultural Bank of China
said it would issue up to 80 billion yuan ($12.83
billion) worth of preference shares, taking advantage of new
rules announced this year aimed at helping Chinese companies
bolster capital levels.
AgBank would be the first of China's big four
lenders to issue preference shares, under new rules announced by
the China Securities Regulatory Commission and the China Banking
Regulatory Commission in April.
Chinese lenders need to raise funds to boost their capital
adequacy ratios, a measure of how much capital banks hold in
reserve against assets such as loans.
"We believe the issuance of preferred shares will allow for
an alternative fundraising channel without having a dilutive
impact on existing shareholders, which should ease pressure on
the bank sector's valuation," said analysts for Daiwa Capital
Markets in an April research note.
Preference shares come with a greater claim on the company's
assets than common stock, but do not offer voting rights.
The deal would take the form of a private placement, the
bank said in a filing with the Hong Kong stock exchange on
The issuance is pending approval by Chinese banking
regulators, AgBank said, and the bank will issue an initial
tranche of up to half the approved total within six months of
permission being granted.
($1 = 6.2343 Chinese yuan)
(Reporting by Lawrence White; Editing by Sunil Nair)