2011-01-13 11:05

BEIJING - The Industrial and Commercial Bank of China (ICBC), the largest lender by market value, will not raise funds from the capital market in three years as it promised in 2010, Chairman Jiang Jianqing said on Wednesday.

He was speaking after the bank signed a cooperation contract with the All-China Federation of Industry & Commerce (ACFIC) to strengthen its financial support for small and medium-sized enterprises (SMEs) and the private sector.

"We will continue to strengthen capital management and keep the adequacy above regulator's standards. If needed, we will supplement the capital on our own instead of turning to the capital market," Jiang said.

In 2010, the bank raised about 45 billion yuan ($6.8 billion) by issuing almost 11.3 billion shares of its stock to the original shareholders in the A-share market and more than 3.7 billion shares in the Hong Kong market.

After the fundraising, its capital-adequacy ratio rose to 12 percent. The government-required level for major banks is 11.5 percent.

The central bank called for tighter control over financial risks at its annual work conference last week. Local media reported the bank will check the credit and capital levels of commercial banks monthly this year and raise the reserve requirements for individual lenders if their capital-adequacy ratios do not meet the government-set standards.

Spurred by the regulator's higher capital-adequacy requirement and shrinking credit due to the prudent monetary stance, introduced to curb inflation, ICBC's counterparts such as Agricultural Bank of China, China Minsheng Bank, and Industrial Bank, have announced plans to raise more than 86 billion yuan in total.

Earlier media reports said another major player, China Merchants Bank, was gearing up to raise more than 30 billion yuan through the capital market to fill the gap between its capital-adequacy ratio and the target set by the regulator.

Although ICBC is not planning a similar move, it will optimize its credit structure through lending and creating more financial products for SMEs, Jiang said.

By the end of 2010, the bank had about 460,000 SME clients and lent more than 3 trillion yuan to support their development, more than half of its total lending.

Jiang said the bank will double its lending to SMEs by 2013, as the market demand rises rapidly, bringing more room for profit.

ICBC had a net profit of 127.8 billion yuan in the first three quarters of 2010, a 27.1 percent increase over the same period in the previous year.

Zhou Mubing, vice-chairman of the China Banking Regulatory Commission, said the government will continue to enhance financial services for SMEs by loosening requirements for loans to the enterprises. For example, more tolerance is already being shown regarding non-performing loans to SMEs, he said.

According to Huang Mengfu, chairman of the ACFIC, SMEs accounted for more than 95 percent of the total enterprises in China, and contributed more than 50 percent of GDP in the world's second-largest economy, while creating 70 percent of jobs nationwide.

He said the current lending of commercial banks is not sufficiently flowing into the economy and financial support to SMEs should be further reinforced to benefit the economic growth pattern transition.

"Without the stable and healthy development of SMEs, China has no possibility of substantially achieving economic restructuring."