* All of China's big four expected to issue preference
* Private placement deal is pending regulatory approval
* Deal would boost AgBank core tier 1 ratio as profit growth
(Recasts, adds context, details of expected offerings by other
HONG KONG, May 8 Agricultural Bank of China
said it would issue up to 80 billion yuan ($12.83
billion) of preference shares, the first of the country's big
four lenders to unveil such plans to bolster their capital
As an era of record profit growth draws to an end for
Chinese banks, they are becoming increasingly thirsty for
capital. New funds will help them sustain lending without
falling foul of tough new global rules on capital adequacy
ratios, a measure of how much capital banks hold in reserve
against assets such as loans.
The Agbank deal would take the form of a private placement,
the bank said in a filing with the Hong Kong stock exchange on
Thursday. Following the issuance, the bank's tier 1 capital
adequacy ratio would be boosted by 0.83 percentage point to
10.08 percent, it said.
All four of China's biggest banks are expected to issue
preference shares of a magnitude similar to AgBank's proposed
offering. Industrial and Commercial Bank of China,
AgBank and China Construction Bank could issue 80
billion yuan, while Bank of China may issue up to
100 billion, according to Daiwa Capital Markets estimates.
The AgBank offering is pending approval by Chinese banking
regulators. The lender said it will issue an initial tranche of
up to half the approved total within six months of permission
"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.
($1 = 6.2343 Chinese yuan)
(Reporting by Lawrence White; Editing by Ryan Woo)