PSBC to raise US$7.25b via preferred shares

HONG KONG: Postal Savings Bank of China Co (PSBC) is raising US$7.25 billion (RM30.4 billion) through an issue of preferred shares to shore up its capital buffer and boost lending, becoming the latest Chinese bank to raise funds through the hybrid securities.

State-run PSBC’s fundraising comes a year after it garnered US$7.63 billion in a Hong Kong initial public offer (IPO). The lender also unveiled plans in August for a share listing in Shanghai to raise US$785 million.

The deal will help PSBC “to enhance the overall competitiveness of the Bank, improve the capital structure and to achieve sustainable development,” it said yesterday.

The proceeds will be used to increase its additional tier 1 Capital and support future business development, it said. PSBC’s preferred shares will yield 4.5 per cent a year and have a par value of 100 yuan each, it added.

Preferred shares have the characteristics of both debt and equity, and typically don’t trade on the open market or carry any voting rights.

Listed firms can sell preferred shares to raise capital with minimal dilution in the value of shares held by existing stakeholders.

China’s regulator had previously stipulated that preferred share issues to the public must not contain provisions that allow these shares to be converted to common equity. Reuters