HONG KONG: Agricultural Bank of China said it would issue up to 80 billion yuan ($12.83 billion) worth of preference shares, taking advantage of new rules announced this year aimed at helping Chinese companies bolster capital levels.
AgBank would be the first of China's big four lenders to issue preference shares, under new rules announced by the China Securities Regulatory Commission and the China Banking Regulatory Commission in April.
Chinese lenders need to raise funds to boost their capital adequacy ratios, a measure of how much capital banks hold in reserve against assets such as loans.
"We believe the issuance of preferred shares will allow for an alternative fundraising channel without having a dilutive impact on existing shareholders, which should ease pressure on the bank sector's valuation," said analysts for Daiwa Capital Markets in an April research note. Preference shares come with a greater claim on the company's assets than common stock, but do not offer voting rights.
The deal would take the form of a private placement, the bank said in a filing with the Hong Kong stock exchange on Thursday.
The issuance is pending approval by Chinese banking regulators, AgBank said, and the bank will issue an initial tranche of up to half the approved total within six months of permission being granted.
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