Money

Guangdong bank to raise $2b via share issue

(Agencies)
Updated: 2010-04-09 13:56

Citigroup controlled Guangdong Development Bank said it will issue up to 15 billion yuan ($2.2 billion) in new shares to boost its capital, becoming the latest Chinese bank to raise funds after an industry-wide lending binge in 2009.

The bank would issue up to 3.4 billion new shares to existing shareholders in the first half of this year, it said in a statement on Thursday, without identifying the shareholders.

"This fundraising exercise will help us improve our capital adequacy and fulfill our operational and development needs," bank President Michael Zink said in the statement.

Besides Citigroup, the bank's shareholders include the world's biggest insurer by market capitalization, China Life, and the world's largest mobile operator China Mobile.

Guangdong Development Bank also said it was working on an initial public offering, confirming an earlier Reuters report that it was drafting plans for such a move likely to take place next year.

Chinese banks including ICBC, the world's most valuable bank, embarked on a lending spree in 2009, quietly endorsed by the government, to help prop up the economy during the global financial crisis.

However, many of them, including ICBC, Bank of China and Bank of Communications, are having to raise money to boost their stretched capital adequacy ratios.