ICBC looks to strengthen balance sheet through £4bn discounted rights issue

INDUSTRIAL and Commercial Bank of China (ICBC) yesterday revealed plans to raise 45bn yuan (£4.2bn) through a rights issue this month to replenish capital.

ICBC, which first unveiled the plan in July, is the last among China’s Big Four state banks to raise funds to strengthen balance sheets weakened by last year’s lending binge aimed at aiding China’s economic recovery.

China Construction Bank Ltd (CCB) and Bank of China, the country’s second- and fourth-largest lenders, have detailed plans to raise a combined $18.2bn (£11.3bn) through rights issues this month, while Agricultural Bank of China, the third largest lender, raised $22.1bn in a record initial public offering in July.

ICBC said it would sell 0.45 shares for every 10 existing shares, at steep discounts to its market prices.

The Beijing-based lender, which will start taking subscriptions from investors on 16 November, priced the issue at 2.99 yuan per share in Shanghai, 37 per cent lower than its last closing price of 4.74 yuan.

Its Hong Kong shares will be sold at HK$3.49 (28p) each, at a 47 per cent discount to its market price of HK$6.63.

ICBC’s state parent, Central Huijin, a unit of China’s sovereign wealth fund, has said it will fully participate in the rights issue. Bank of China said yesterday its $9bn rights issue was 99.57 per cent subscribed.