Agribank allays fears of additional capital raising

The lender sticks to its promise not to seek a rights offer to raise additional capital within two years from its IPO.

Agricultural Bank of China Ltd. will not have to conduct additional capital raising before the end of 2012, the Financial Times reported on Monday, citing Li Zhenjiang, board secretary at the bank.

The country’s third-largest bank expects to be able to adjust to tighter capital requirements without a rights offer, the newspaper said, citing Li.

Chinese banks including China Merchants Bank Co. are raising capital to meet higher adequacy requirements set by the China Banking Regulatory Commission. The agency said in April it will raise the minimum ratio for “non-systematically important banks” to 10.5 percent from 8 percent. Lenders’ minimum core capital adequacy requirement was more than doubled to 8.5 percent from 4 percent.

“Li’s comments are consistent with what management has been saying -- AgBank won’t seek a rights offer to raise additional capital within two years from its initial public offering,” Ding Yuan, a spokeswoman for the bank, said by phone from Beijing today.

Agricultural Bank President Zhang Yun said on Aug. 25 the lender has no plans for capital market fundraising, at a press conference after posting a first-half profit gain of 45 percent.

Chinese banks’ shares tumbled last month as central bank data showed savings were headed for the first quarterly decline in almost 20 years. Agricultural Bank’s shares traded in Hong Kong dropped 8.5 percent on Sept. 30, the most since the stock’s debut in July last year and capping a 37 percent retreat last quarter. The shares further declined 7.4 percent today to trade at HK$2.39 a share as of 11:06 a.m. local time.

View the full story in Business Week.