SHANGHAI (AFP) – The Industrial and Commercial Bank of China (ICBC) will sell more than $5.60 billion worth of preferred shares offshore in three different currencies, it said Thursday, as the world’s biggest lender bolsters its capital.
ICBC is issuing the shares in three tranches: $2.94 billion in US dollars, 12.0 billion yuan ($2 billion) and 600 million euros ($739 million), according to a statement filed with the Hong Kong Stock Exchange, where it is listed.
Preferred shares, also known as preference shares, grant the investor a fixed dividend income on a regular basis, to be paid ahead of ordinary shareholders.
The annual dividend for ICBC’s preferred shares in all three currencies was set at 6.0 per cent, the statement said.
The sale is the first time a Chinese bank has issued a Basel III-compliant capital instrument overseas in three currencies, ICBC said in a separate news release.
Basel III is an international standard for capital adequacy that banks are now phasing in.
Under Basel III, China’s banking regulator requires “systemically important” banks, such as ICBC, to have a “Tier 1” capital adequacy ratio of 9.5 per cent by end-2018.
The offshore preference shares, when issued, will qualify as additional Tier 1 capital for ICBC, the bank said. It has said its ratio already stood at 11.36 per cent as of the end of June.
Shares of ICBC gained 2.30 per cent to HK$5.34 ($0.69) in Hong Kong on Thursday after announcing the share sale. It jumped 4.15 per cent to 4.27 yuan in Shanghai, where the bank is also listed.