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RETAIL BANKING | Cesar Tordesillas, China
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Minsheng awaits govt approval for financing plan

China Minsheng Banking Corp's current capital level will still meet operational needs for this year even if the government rejects its financing plan.

 

This was assured by the bank's director of asset and liability management, Zhang Changlin.

China Minsheng Banking Corp's released a financing plan in February, which the bank's senior executives say will cover the bank’s capital requirements for the next two and a half years.

“We are awaiting regulators’ final approval to replenish capital,” Zhao Pinzhang, vice-president of CMBC, said at a news conference held in Beijing.

According to the financing plan, the bank hopes to raise about 29 billion yuan or $4.53 billion by selling 20 billion yuan in convertible notes on the A-share market and selling 9 billion yuan in shares on the Hong Kong stock market.

By the end of June, CMBC’s capital adequacy ratio increased from the beginning of the year by 0.29 percentage point to 10.73 percent, but its core capital adequacy ratio declined by 0.32 percentage point to 7.75 percent, below the 8 percent minimum set by the China Banking Regulatory Commission, according to the lender’s half-year report, which was released on Aug 17.

Zhao said the bank is trying to reduce costs and is focusing on developing its intermediary business, which contributed 23 percent to total income in the first half, to reduce tied-up capital and increase efficiency.

At present, the bank’s loan-to-deposit ratio stands at 73.26 percent, close to the 75 percent limit set by the CBRC.

“We are concerned about the bank’s high cost to raise and use capital, especially given the slowdown of its retail deposit growth and smaller proportion of demand deposits,” said Sun Peng, an analyst at BOC International (China) Ltd.

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