ICBC to conduct bond sale to raise capital

Beijing - Industrial and Commercial Bank of China Ltd plans to sell 38 billion yuan ($5.9 billion) of subordinated bonds as soon as next week, according to a person familiar with the matter.

The bank hired Citic Securities Co, Bank of China Ltd and China International Capital Corp to manage the offering. The maturity terms have not been decided, said the person, who declined to be identified because the matter is private.

Banks plan to sell 130 billion to 150 billion yuan of subordinated bonds in 2011, the most since 2009, according to the investment bank China International Capital Corp. The securities would help banks bolster supplementary, or lower-Tier 2 capital levels, as regulators worldwide tighten requirements to curb risks following the global credit crisis.

China's five main State-owned banks, controlling about half of the nation's banking assets, raised $56 billion selling shares and convertible bonds last year to bolster capital.

They may have to raise 860 billion yuan in share sales over six years to meet stricter capital rules, according to estimates from the industry regulator.

"There is an insatiable appetite for capital," Charlene Chu, senior director of financial institutions at Fitch Ratings in Beijing, said at a conference in Singapore.

For most banks, profit growth "continues to not keep up the pace with growth in assets and this is why we have the Chinese banks coming back to market every 12 to 18 months to raise capital".

In October 2008, ICBC won approval from shareholders to raise as much as 100 billion yuan from selling subordinated bonds by the end of 2011.

The lender has raised about 62 billion yuan from such securities over the past two years. ICBC media officer Wang Zhenning wasn't immediately available to comment on Wednesday.

Bloomberg News

(China Daily 06/23/2011 page17)