Shanghai Pudong Development Bank Co. confirmed Thursday that it
plans to sell additional shares to boost core capital.
The bank would disclose details of the share sale plan, which
was yet to be decided, after a meeting of its board of directors in
the near future, it said in a statement to the Shanghai Stock
Exchange.
The plan would be subject to approval at a shareholders meeting
in March after being approved by the board of directors later this
month, Thursday's Shanghai Securities News reported.
Capital adequacy ratio in the Chinese partner of Citibank fell
to 8.4 percent, near the required minimum level of eight percent,
by the end of the third quarter last year after rapid business
expansion.
The bank did not rule out the possibility of equity investment
in the future, the newspaper cited an unnamed senior bank official
as saying.
"For example, even if it intends to invest in an insurance firm,
the bank needs regulatory approval for the pilot program," the
official said.
A share sale worth 20 billion yuan was reasonable, and a huge
capital input would dilute the earnings per share, analysts
said.
Shares in the mid-sized bank dived by the 10-percent daily limit
on Wednesday on market talk that it planned to raise 40 billion
yuan (5.6 billion U.S. dollars) by public offering. The shares fell
more than five percent shortly after a one-hour suspension on
Thursday.
The talk dampened investor sentiment by adding liquidity
concerns and sank the key Shanghai Composite Index by 2.09 percent
on Wednesday. The index dropped another 1.4 percent at 11:00 a.m.
on Thursday.
Shares in Ping An Insurance, China's second largest life
insurer, have plunged more than 25 percent since it announced on
Jan. 21 the issue of 1.2 billion A shares and up to 41.2 billion
yuan worth of convertible bonds.
(Xinhua News Agency February 21, 2008)
