China Merchants eyes raising $3.22bln via rights issue

Rights issue with 1.3-for-10 ratio for Shanghai and Hong Kong aimed to bolster balance sheet.

China Merchants Bank, the country's sixth-biggest lender, said on Tuesday that it had set a rights issue with a ratio of 1.3-for-10 for both Shanghai-listed A shares and Hong Kong-listed H shares in its maximum $3.22 billion fund-raising plan.

That would price the lender's new shares at as much as 8.85 yuan ($1.3) per share, representing a 44 percent discount to its yuan-denominated A shares and a 47 percent discount to its H shares, China International Capital Corp (CICC) said in a note to clients.

China Merchants Bank said earlier this month that it won regulatory approval to raise up to 22 billion yuan ($3.22 billion) via a rights issue, joining other Chinese lenders in a rush to bolster balance sheets after last year's lending spree weakened finances and prompted regulators to tighten capital rules.

"China Merchants Bank is short of capital after its expensive acquisition of Hong Kong's Wing Lung Bank and rapid loan expansion in 2009," said Qiu Zhicheng, analyst at Guosen Securities. "The fundraising would ease the bank's mid-term capital pressure."

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