BANK of China (BOC), the country’s fourth-largest lender by assets, yesterday said it would issue up to 100 billion yuan (US$16.03 billion) worth of preferred shares, taking advantage of new rules announced this year aimed at helping Chinese companies bolster capital levels.

    It is the second of China’s big four lenders to confirm plans to issue preferred shares, under new rules announced by the China Securities Regulatory Commission and the China Banking Regulatory Commission in April.

    Agricultural Bank of China said May 8 it would issue up to 80 billion yuan worth of preferred shares.

    Bank of China said its board approved a plan to issue up to 600 million shares on the mainland and no more than 400 million preferred shares offshore in a private placement. The shares will have a par value of 100 yuan per share and will be issued at par, the lender said.

    Preferred shares permit banks to raise capital without selling common equity. The securities that are issued by banks through private placements can be converted into common stock if capital ratios fall below a certain level.

    In April, China’s banking and securities regulators rolled out detailed rules allowing lenders to issue preferred shares to help them address capital requirements needed to meet global standards known as Basel III.

    The government wants to boost the Tier 1 capital-adequacy ratio — a measure that compares equity capital and retained profits with risk-weighted assets — to at least 11.5 percent at large banks and 10.5 percent at smaller ones by 2018. (SD-Agencies)