AgBank to raise RM62b in China’s biggest additional sale

SHANGHAI • Agricultural Bank of China Ltd (AgBank) said it aims to raise as much as 100 billion yuan (RM61.69 billion) in what would be the biggest-ever follow-on share offering by a Chinese company as it moves to replenish capital.

China’s third-largest lender will sell up to 27.5 billion shares to seven state-linked entities including the country’s Finance Ministry, Central Huijin Investment Ltd and China National Tobacco Corp, the Beijing-based company said after yesterday’s market close.

The fundraising comes as Chinese banks prepare to shift to more stringent accounting standards known as IFRS9 this year, and as policymakers intensify their efforts to curb leverage and rein in shadow banking. The regulatory developments will add to pressure on Chinese banks’ capital ratios, economists at UBS Group AG have warned. China’s financial regulators yesterday urged banks to be innovative in raising capital and said they would facilitate sales of perpetual bonds, tier-2 capital bonds and other capital tools. AgBank’s capital adequacy ratio stood at 13.4% at the end of September, the lowest among the nation’s four-largest state lenders, while its core tier-1 ratio was 10.6%.

That is comfortably above the minimum set by the China Banking Regulatory Commission (CBRC) for systemically-important banks such as AgBank. The CBRC requires such banks to have a minimum capital level of 11.5% by the end of 2018, with a core tier-1 ratio at least 8.5%.

In a separate statement, AgBank reported that profit rose 5% to 193 billion in 2017, lifted by higher lending mar- gins and improved asset qual- ity. — Bloomberg