By Fiona Law
One of China’s big four banks has met with European investors as part of its early efforts to sell billions of dollars in shares, according to people familiar with the matter, signaling the lengths Chinese lenders are going to as part of a cash-raising spree.
Officials from Bank of China Ltd. /zigman2/quotes/204682472/delayed HK:3988 +0.65% /zigman2/quotes/201568493/composite BACHY +0.25% /zigman2/quotes/209359942/delayed CN:601988 +0.61% visited fund managers in London last week to gauge interest and gather opinions on the $6.5 billion of preferred shares it plans to sell offshore, according to the people. They say the bank will consider selling the securities in both dollars and euros.
China’s banks are rushing to raise cash through equity and debt sales to help bolster their balance sheets to meet tough new regulatory requirements and to defend against a slowing economy and souring loans. Turning to Europe opens up a fresh pool of investors amid concerns there may not be enough demand in Asia for the hundreds of billions of dollars of issuance expected in coming years.
The big four banks started selling debt in China in the past few weeks, while Bank of China is poised to be the first to tap overseas demand for preferred shares, on top of the $9.8 billion planned for the domestic market. The regulator in April granted a go-ahead for all banks to offer the stock-bond hybrids to help them beef up their capital. Bank of China didn’t respond to a request for comment.
“It’ll definitely be a test to the industrial appetite” for these securities, said Jacob Gearhart, Asia head of global risk syndicate at Deutsche Bank AG /zigman2/quotes/205584254/delayed DE:DBK +1.88% /zigman2/quotes/203042512/composite DB +1.34% .