Money

Central Huijin backs BOC's rights issue

(Xinhua)
Updated: 2010-07-06 09:55

Pedenstrians pass by a BOC outlet in Nanjing, Jiangsu province on Jan 13, 2010. [Asianewsphoto]

Bank of China (BOC), the country's third largest lender, said Monday that Central Huijin Investment Ltd, an arm of China's sovereign wealth fund, would fully participate in its rights issue.

In a statement filed with the Shanghai Stock Exchange, BOC said it has received a commitment letter from Huijin.

Related readings:  BOC: New funding to suffice for 3 years  Bank of China announces 60b yuan rights offer  BOC halted in HK after report on stock offer  Central Huijin to raise funds from bond issue

Further, the investment arm would subscribe in cash for all rights shares offered in the issue, the BOC said.

The bank said on Friday it plans to raise up to 60 billion yuan ($8.8 billion) through a rights issue, just a month after it sold bonds worth 40 billion yuan for conversion into Shanghai-listed shares.

BOC said it would use the proceeds from the rights issue to replenish its capital base and shore up its capital adequacy ratio.

The bank proposed a 1.1-for-10 rights issue to existing shareholders. Up to 27.92 billion shares would be offered.

China's banks have announced multi-billion-dollar fund raising plans this year to shore up their balance sheets following a surge in lending last year.