Liu Minxia

    mllmx@msn.com

    PING An Bank Co., the banking arm of China’s second-largest insurer, plans to raise as much as 30 billion yuan (US$4.8 billion) through selling common shares and preferred shares to replenish its capital.

    The bank will sell as much as 10 billion yuan worth of yuan-denominated shares to no more than 10 institutional investors, including Ping An Bank’s parent company, Ping An Insurance (Group) Co., the Shenzhen-based bank said in an exchange filing late Tuesday.

    The bank also said it would raise another 20 billion yuan by selling preferred shares through private placement to no more than 200 investors, according to a separate statement.

    Ping An Insurance, which holds 59 percent of Ping An Bank, is expected to buy 45 percent to 50 percent of its banking unit’s latest common share sale and 50 to 60 percent of the preferred shares, according to the statements.

    Ping An Insurance will spend up to 17 billion yuan, up to 5 billion of which will be in cash, on about 535 million common shares and 120 million preferred shares. The insurer will hold 58.5 percent of Ping An Bank after the new share issues.

    The share sale is still subject to approval from China’s banking regulator, said the bank.

    Ping An’s Tier-1 capital ratio stood at 8.7 percent at the end of March, close to the minimum requirement of 8.5 percent. The bank is aiming for a level of 9 percent and an overall capital adequacy ratio of more than 11 percent from 2014 to 2016, after adding an extra buffer, on top of regulatory requirements, it said in the statements.

    Ping An Bank’s share sale follows stricter capital rules in accordance with global standards known as Basel III. Regulators want 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.

    Analysts say the preferred shares won’t exert much pressure on Ping An Bank’s earnings and the private placement can actually bring profits to the bank in the long run.