2010-07-05 14:05

Bank of China said its bid to raise up to $8.86 billion should give it sufficient capital for the next three years, seeking to ease investor concerns about finances at China's No 4 lender.

The bank said late on Friday it planned to raise up to 60 billion yuan ($8.86 billion) through a rights offer in Shanghai and Hong Kong, which would see shareholders get up to 1.1 rights shares for every 10 shares held. [BOC to raise up to $8.86b in rights offer]

In an investor call on Monday morning, the bank said it aimed to complete the rights offer by year end, and that it expected no further need for additional fundraising in the next three years, according to several analysts on the call.

The bank also said it expected its capital adequacy ratio to be stable at about 12 percent for the next three years after collecting new funds from the rights issue, analysts said.

A Bank of China spokeswoman could not immediately confirm details from the call.

Combined with a convertible bond issue that raised about $5.9 billion in Shanghai last month, the new rights issue could bring Bank of China's fundraising activities this year to nearly $15 billion.

Its fundraising is part of a broader rush by Chinese banks to replenish capital depleted by a 2009 lending spree and to meet a tighter capital adequacy ratio demanded by regulators.

Most of China's top banks, including the two largest, Industrial and Commercial Bank of China and China Construction Bank, have announced plans to tap capital markets, aiming to raise more than $70 billion combined to replenish their coffers.

Even with the convertible bonds and rights issue, Bank of China's capital adequacy ratio would still only reach about 12 percent, versus a government mandated minimum of 11.5 percent, according to some analysts.

"At present, Bank of China is the one that needs the money most badly," said Liu Yinghua, an analyst with Ping An Securities. "Other major banks will also likely do one more round of fundraising next year, if not this year."