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China : PREFERENCE shares up to 60-bln-yuan issued by BOC

May 14, 2014

The Bank of China (BOC), one of China's big-four banks, declared that it will issue preference shares worth no above 60 billion yuan ($9.73 billion) in the domestic market to refill its tier one capital.

The bank is the third banking institution to release an issuance plan, following the Agricultural Bank of China and SPD Bank, after the country's securities regulator permitted commercial banks to issue preference shares to increase funds on April 18.

The non-public issuance will not go beyond 600 Million shares with face value of 100 yuan, as per to the bank's declaration filed with the Shanghai Stock Exchange.

The BOC said that the funds raised will be used to improve the tier-one capital adequacy ratio and further strengthen the bank's capital structure.

Besides the issuance, preference shares of no above 40 billion yuan will be issued separately in the offshore market.

The plan is still awaiting authorization from the general meeting of shareholders and is dependent on reviews of the China Banking Regulatory Commission and China Securities Regulatory Commission.

Preference shares, along with common shares, are the two primary types of stocks that companies offer to investors. Preference share holders have priority rights over ordinary share holders in relation to distribution of profits and residual assets.

China declared on March 21 that it would launch a pilot program permitted eligible listed and unlisted public companies to issue preference shares in an offer to open up additional financing channels and provide more investment instruments.

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Source: TendersInfo (India)

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