Everbright can meet China capital rules
Mainland bank says HK listing this month will help it meet tighter funding requirements before 2018 Basel III stricter supervision deadline
China Everbright Bank, a Beijing-based lender making its third tilt at a Hong Kong flotation, says it will be able to meet more stringent mainland capital requirements within two years after raising fresh equity capital.
The medium-sized lender said it was also considering other fundraising plans, including the issuance of preferred shares, to replenish its capital base.
"We expect to meet the official capital requirements ahead of 2018, when all the commercial banks are required to comply with Basel III's stricter capital supervision rules," executive vice-president Lin Li said in Hong Kong yesterday. "After the IPO, we should be able to comply with the official capital requirement in two years."
Lin said the freshly raised capital could lift Everbright Bank's core capital adequacy ratio by 1 percentage point and boost its lending capacity by about 200 billion yuan (HK$254 billion).
Beijing has ordered the mainland's biggest banks to have capital adequacy ratios of 9.5 per cent by the end of this month, and 11.5 per cent by the end of 2018.
All the proceeds from Everbright Bank's initial public offering will go to replenishing its capital base. Its capital adequacy ratio stood at 9.67 per cent in June and its core capital adequacy ratio at 8.34 per cent.
Everbright Bank plans to raise as much as HK$21.7 billion in its Hong Kong float, with an indicative price range between HK$3.83 and HK$4.27 a share, representing a price-book ratio of up to one times this year's expected book value.