Bank of China Falls in Hong Kong on Capital Comment

"Bank of China Falls in Hong Kong on Capital Comment | AboutHK.Com - More Information About HK"

Bloomberg Bank of China Ltd., the nation’s third-largest lender by market value, paced declines in Chinese bank stocks in Hong Kong after saying yesterday it is studying “various options” to replenish capital. The stock fell 3.3 percent to HK$4.47 at 10:49 a.m. local time, extending a two-day decline to 7.1 percent, the most since June 19. The benchmark Hang Seng Index fell 0.2 percent. China’s five biggest banks submitted plans to regulators to raise funds after unprecedented lending eroded their capital, people familiar with the matter said yesterday. Lenders were told by the nation’s banking regulator to estimate potential deficits in 2010 based on their own loan forecasts and capital ratio targets, they said. “Although the potential capital raising may not be imminent and will likely be a managed process, we believe this could be a sector overhang,” Goldman Sachs Group Inc. analysts led by Ning Ma wrote in a note today. Industrial & Commercial Bank of China Ltd., the world’s largest by market value, fell 2 percent to HK$6.71. China Construction Bank Corp., the nation’s second largest, fell 2 percent to HK$7.01, while Bank of Communications Ltd. dropped 2 percent to HK$9.27. Their Shanghai-traded shares also declined. The China Banking Regulatory Commission said this week that lenders must formulate longer-term fundraising plans and those with “relatively low” capital adequacy ratios and without a “practical” plan will face restrictions on their operations including limits on market entry, outbound investment, new branches and expansion. Capital adequacy ratios, or capital as a percentage of risk-weighted assets, fell at the nation’s four largest publicly-traded banks in the first nine months, even as they raised a combined 165 billion yuan selling subordinated bonds. --Luo Jun. Editors: Brett Miller, Andreea Papuc To contact Bloomberg News staff of this story: Luo Jun in Shanghai at +8621-6104-7021 or jluo6@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it