Bank Of Communications: HSBC Board OK'd Plan To Invest In Bocom Rights Issue
April 29 2010 - 5:16AM
Dow Jones News
HSBC Holdings PLC (HBC), which owns a 19% stake in China's Bank
of Communications Co. (3328.HK), has endorsed a plan to invest in
Bocom's proposed rights issue, a senior Bocom executive said
Thursday.
HSBC's board approved the plan to "fully participate" in the
Chinese lender's upcoming rights issue in both Shanghai and Hong
Kong, Yu Yali, Bocom's chief financial officer, said at a press
conference.
Bocom, which is China's fifth-largest lender by assets, gained
approval from shareholders and the country's banking regulator
earlier this month for a CNY42 billion rights issue to shore up its
capital after a credit boom last year.
The proposed fund-raising will enable the bank to keep a
capital-adequacy ratio of at least 12% in the coming four years.
China requires its five biggest lenders to have a minimum capital
adequacy ratio of 11%.
As of March 31, Bocom's capital adequacy ratio slipped to 11.73%
from 12% at the end of 2009.
Based on its 19% ownership, HSBC is expected to spend a maximum
of around CNY7.98 billion if it fully takes part in Bocom's rights
issue in Shanghai and Hong Kong.
Bocom said earlier Thursday its first-quarter net profit jumped
31% on year to CNY10.45 billion, boosted by higher interest income
and fee-based revenue.
-Wang Ming and Shen Hong contributed to this article, Dow Jones
Newswires; 86-21-6120-1200; hong.shen@dowjones.com
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