* Boosts Tier 1 capital ratio to 9.7 pct from 8.2 pct
* Shares suspended on Monday, to resume trade on Wednesday
* Economic growth expected to increase demand for credit
(adds CIMB confirmation, changes dateline)
By Yantoultra Ngui and Denny Thomas
KUALA LUMPUR/HONG KONG, Jan 13 Malaysian bank
CIMB Group Holdings has raised $1.1 billion through
new shares to boost core capital, it said on Monday, as it takes
on rivals in credit and equity markets at home and abroad.
Southeast Asia's fifth-largest lender is bracing for rising
demand for credit on the back of rapid economic growth in
Malaysia and a pipeline of large initial public offerings in the
country this year.
Its consumer and corporate loan businesses have also been
growing at double-digit rates, fuelled by strong economic growth
in southeast Asia, where it counts Singapore, Indonesia and
Thailand as key overseas markets.
CIMB said it issued 500 million shares, or 6.08 percent of
its enlarged capital, at 7.10 ringgit each through a private
The placement was at the lower end of an earlier indicative
price range of 7.10 to 7.25 ringgit, according to a term sheet
seen by Reuters, against its last traded price of 7.30 ringgit.
"With the new capital we stand strong to face any future
volatility in financial markets and can continue to grow our
business at our desired pace," Chief Executive Nazir Razak said
in a statement.
CIMB's core capital has lagged behind larger regional
peers. Its Tier 1 ratio - a key measure of a bank's financial
strength - was 8.2 percent at the end of September, below local
rival Maybank's 10.79 percent. DBS Group Holdings
, southeast Asia's biggest lender, had a Tier 1 ratio
of 13.3 percent at the end of September.
The capital raising boosts CIMB's Tier 1 ratio to 9.7
percent, the bank said.
"They are taking a dual direction, to invest in their home
market as well as the overseas growth drivers. In order to
continue both ways, the capital required is quite high," said
Chan Ken Yew, head of research at Kenanga Research in Kuala
INVESTMENT BANKING PUSH
Under CEO Razak, CIMB has boosted regional operations over
the past decade and expanded its investment banking capabilities
by acquiring parts of Royal Bank of Scotland's Asia
operations outside Japan.
Last year CIMB became the only Asian bank to win a mandate
to advise Warrnambool Cheese and Butter Factory Co, the
target of a multi-billion three-way global takeover battle in
The CIMB share sale is the biggest in Malaysia since Maybank
tapped equity markets with a $1.2 billion offering in October
2012, Thomson Reuters data shows.
Trading in CIMB, which has a market value of $17.3 billion,
was suspended on Monday ahead of the announcement and will
resume trade on Wednesday. Tuesday is a public holiday in
Bank of America, CIMB Investment Bank and Credit
Suisse were joint book runners for the share sale.
(Additional reporting by Elzio Barreto and Umesh Desai in Hong
Kong, Al-Zaquan Amer Hamzah in Kuala Lumpur and Saeed Azhar in
Singapore; Editing by Miral Fahmy and David Goodman)