China's Bank of Communications Co. Ltd. (BoCom), the nation's fifth largest bank, aims to raise $8.9 billion in a share sale to current shareholders like HSBC and the Chinese Ministry of Finance.
Trading in the stock was suspended Thursday in advance of the announcement of the share issuance, part of an effort by Shanghai-based BoCom to improve its core capital-adequacy ratio in advance of new requirements by China's bank regulators, reported The Wall Street Journal.
The new regulations will require all systemically important Chinese banks to keep a core capital-adequacy ratio of at least 9.5 percent. At the end of the third quarter last year, BoCom had a core capital-adequacy ratio of 9.24 percent.
BoCom will need an estimated 40 billion yuan ($6.32 billion) to bring its core capital-adequacy ratio to 10.5 percent, according to the Journal.
New Hong Kong- and Shanghai-listed shares for the bank will be sold in what is expected to be the largest global share offering since May, according to Bloomberg News.
In addition to HSBC Holdings PLC and the Chinese ministry of Finance, the Chinese National Council for Social Security Fund and tobacco companies Shanghai Haiyan and Yunnan Hongta will participate in the share offering.
HSBC will reportedly pay roughly HK$13.2 billion ($1.7 billion) in cash for 2.4 billion shares, maintaining its shareholding of BoCom at a minimum 19.03 percent, its current level. HSBC, which first invested in BoCom in 2004, seeks to maintain its shareholding in BoCom as a part of its acceleration of business in growing markets.