China CITIC Bank (中國中信銀行) said it plans to raise up to US$3.84 billion in a rights offer in Shanghai and Hong Kong in a bid to heed calls from China for lenders to boost their defenses against bad loans.
The bank announced in a statement late on Wednesday a proposal to sell up to 2.2 shares for each 10 of its existing shares in Shanghai and Hong Kong, making it the latest Chinese lender to reveal plans to raise new cash. The proposal will be submitted for shareholder approval, the lender said.
Proceeds from the issue will be used to “improve the bank’s core capital ratio, and to support the bank’s continuing development and business growth,” according to the statement to the Shanghai and Hong Kong stock exchanges.
Many Chinese banks have mooted plans to raise massive funds after a government-urged lending binge last year raised concerns about the health of their capital.
China CITIC’s announcement came as mid-sized lender China Everbright Bank (中國光大銀行) put itself on course to raise 21.7 billion yuan (US$3.20 billion) from a Shanghai listing next Wednesday by setting the price of its shares at the top end of its indicative range. The initial public offering will be China’s second-largest this year.
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