China Construction Bank targets selling $11bln in shares

Proceeds from local private placement and Hong Kong rights offer to raise capital after credit boom.

China Construction Bank Corp., the nation’s second largest, plans to sell shares to raise about 75 billion yuan ($11 billion) of capital this year, said two people with direct knowledge of the matter.

The Beijing-based lender may raise no more than 45 billion yuan ($6.59 billion) in a private placement on the local share market in Shanghai and 30 billion yuan ($4.39 billion) in a rights offer in Hong Kong, said the people, declining to be named because the plans are not public.

China Construction is joining rivals Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and Bank of Communications Ltd., who have announced plans to raise a combined 107 billion yuan ($15.67 billion) after a credit boom drained capital.

Chinese lenders doled out a record 9.59 trillion yuan ($1.4 trillion) in 2009, helping fuel an economic recovery in the world’s third-largest economy. The company’s capital adequacy ratio dropped by almost 1 percentage point last year to 11.7 percent as of Dec. 31, close to the 11.5 percent that Chairman Guo Shuqing said was the banking regulator’s minimum requirement for the lender.

View the full story in Bloomberg.