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RETAIL BANKING | Tony Chua, China

Shenzhen Development Bank mulls raising funds via private placements

The lender joins rivals in capital raising to comply with governments stricter requirements.

Shenzhen Development Bank Co Ltd is planning more fundraising, possibly via private placements, top executives said on Wednesday, to strengthen its balance sheet in the face of higher capital requirements.

Chinese banks, including Bank of China Ltd , China Construction Bank Corp and China Minsheng Banking Corp Ltd , have been raising funds over the past year or so to boost working capital as the government could tighten capital requirements.

"We will ultimately need some form of fundraising, but will not be allowed to do so because of regulatory constraints," Chief Financial Executive Chen Wei told a news conference. "As such, a private placement may be the best way forward."

The mid-sized Chinese bank, which has a market capitalisation of about HK$58 billion ($7.5 billion), also said lending from its local government financing vehicles accounted for 5-5.5 percent of total loans.

"In line with policy, we started the process of reducing local government financing vehicle lending about a year ago. During that time, local government financing vehicle exposure was 22 percent. It's now 5-5.5 percent. We'll continue to reduce, " said President Richard Jackson.

Rampant lending to local government financing vehicles had sparked market concern over the risk to China's financial industry, analysts said.

View the full story in Reuters.

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