China Merchants Bank plans to sell shares

The lender pursues fundraising plans despite its statement last March 2010 emphasizing that it would have no need to raise additional capital for the next three years.

China Merchants Bank Co. Ltd. said on Friday it is seeking shareholder approval to issue up to 20% of existing A and H-shares, China Business News reported.

The motion will be discussed at the bank's shareholder meeting on May 30, the report said.

As of the end of 2010, CMB had total capitalization of 21.577 billion shares, of which 17.666 billion shares are Shanghai-listed A-shares and the remainder are Hong Kong-listed H-shares.

Based on the bank's Friday (Apr. 15) closing price of RMB 15.18 in Shanghai ($2.32), CMB could raise around RMB 65.5 billion ($10.03) via the share issue.

The bank said it also plans to issue up to RMB 30 billion ($4.59 billion) worth of local currency bonds by the end of 2013 provided its outstanding bond issue as of end-2013 does not exceed the bank's total outstanding debts as of end-2010.

CMB had a core capital adequacy ratio of 8.04% at the end of 2010, within touching distance of the 8% regulatory minimum. If it were raised to 10%, the bank's funding gap might be greater than RMB 30 billion ($4.59 billion).

View the full story in Business China.