Bloomberg News

Bank of China Doesn’t Plan to Sell Shares Before End of 2012

November 07, 2011

(Updates with share price in sixth paragraph.)

Nov. 7 (Bloomberg) -- Bank of China Ltd., the country’s third-largest lender by assets, said it doesn’t plan to sell shares before the end of next year after being named as one of 29 lenders globally that must hold additional capital buffers.

A press officer for the bank, who declined to be named citing company policy, confirmed a report by Shanghai Securities News about the equity fund raising. The Beijing-based lender was the only Chinese bank included in a provisional list of systemically important financial institutions published by the Financial Stability Board on Nov. 4.

China’s banking regulator joined global policy makers this year in tightening requirements to curb risks. Shares in Bank of China have fallen 33 percent this year, compared with an average of 18 percent for the country’s four largest lenders, on concern bad debts will increase as the economy slows. There is a “higher risk” the bank will need to raise capital than at its larger peers, May Yan, a Hong Kong-based analyst of Barclays Capital Inc., wrote in a note.

“Bank of China was chosen because it has more overseas business than its rivals,” Yan said by phone. About 17 percent of the bank’s first-half profit came from overseas, compared with less than 5 percent for Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., she said, referring to the world’s largest lenders by market value.

Global Standards

The 29 lenders, including Deutsche Bank AG and Goldman Sachs Group Inc., may need to hold additional capital buffers ranging from 1 to 2.5 percentage points to prevent them from failing and roiling the global economy.

Shares in Bank of China fell 0.7 percent to HK$2.74 as of 11:10 a.m. local time, compared with the 0.1 percent decline in the city’s benchmark Hang Seng Index.

Bank of China’s core capital adequacy ratio was 9.92 percent at the end of September, according to the bank’s third- quarter earnings filing to the Hong Kong stock exchange. That was higher than the 8.5 percent draft requirement set out by China’s banking regulator in August and the 8 percent to 9.5 percent level required by the Basel Committee.

--Editors: Nathaniel Espino, Chitra Somayaji

To contact the reporter on this story: Stephanie Tong in Hong Kong at stong17@bloomberg.net

To contact the editor responsible for this story: Nathaniel Espino at nespino@bloomberg.net


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