BoCom to Raise 33.1 Bln Yuan

(Beijing) - The Bank of Communications, China's fifth largest bank by assets, will raise 33.1 billion yuan in its planned A-share and H-share rights issue, lower than the previous target of 42 billion yuan, according to a statement by the lender on June 6.

"The downsizing of the issuance is related to a discount to offered share prices and a weak market," said a source at the lender.

The rights issue will boost the lender's capital adequacy ratio by 1.5 percentage points. The capital adequacy ratio and core capital adequacy ratio tumbled to 11.73 percent and 8.12 percent at the end of the first quarter, down by 0.27 percentage point and 0.03 percentage point from the beginning of this year.

Bank of Communications will issue 3.89 billion yuan-denominated shares in Shanghai and 3.46 billion Hong Kong-dollar denominated shares in Hong Kong, according to a statement released by the lender. The A-shares will be offered at 4.5 yuan each and H-shares at HK$ 5.14. On Friday, the bank closed at 6.39 yuan in Shanghai and HK$ 8.19 in Hong Kong.

"As many big Chinese banks plan to float shares this year, it will be sensible to give a discount," said a banking analyst.

The subscription period for the rights issue will take place from June 10 to June 21. The online road show for the A-share issuance will kick off on June 8.

The Ministry of Finance and HSBC, the bank's shareholders, have agreed to subscribe to the rights issue.