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Minsheng Bank struggles to meet new regulations

Minsheng Bank struggles to meet new regulations

(30 March 2012 – China) In order to meet tougher government regulations, China Minsheng Banking Corporation needs US$1.4 billion (A$1.2 billion). Minsheng Bank, the first Chinese bank owned by non-government entities, intends to raise the amount in a Hong Kong share sale to improve capital amid tightened rules for risk buffers.

It offered 1.65 billion shares at a 5 percent discount from its closing price on 23 March.

The share sale could boost Minsheng’s Tier-1 ratio by at least 55 basis points to 8.42 percent, said one analyst. The bank is required to achieve a Tier-1 ratio of at least 8.5 percent by 2016.

In February 2011, Minsheng said it planned to issue as much as US$3.2 billion of convertible bonds in Shanghai and sell as many as 1.65 billion new H-shares in Hong Kong to replenish core capital. Proceeds from the share sale will be used to improve the capital adequacy ratio.

Minsheng’s capital adequacy ratio stood at 10.86 percent as of 31 December, while the core ratio was 7.87 percent.

Both are the lowest among the nine publicly traded Chinese lenders listed in Hong Kong.

In August 2011, the China Banking Regulatory Commission said it would require the country’s largest lenders to have a minimum capital adequacy ratio of 11.5 percent by the end of 2013.

Smaller banks would be required to have at least 10.5 percent under "normal conditions" by the end of 2016.
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