CITIC Bank to Issue Debt

China CITIC Bank will issue debt to replenish capital, the chairman of the bank's parent company, CITIC Group, said.

Kong Dan, head of CITIC Group, said on March 8 that the size of the debt has not been decided and more details are under discussion. On February 8, CITIC Bank's shareholders approved a plan to issue 25 billion yuan worth of 15-year subordinated or mixed debt. 

Kong said CITIC Group, as the bank's major shareholder, will consider boosting core capital while accommodating the interests of small shareholders. He added that new lending in 2010 was no higher than that in 2009, saying that credit will be issued at a balanced pace.

The proportion of subordinated debt to total capital at CITIC Bank, with 100 billion yuan of core capital, is the lowest among stock-holding banks, he said. CITIC Bank's capital adequacy ratio was 11.24 percent, with core capital ratio at 9.84 percent, at the end of the third quarter in 2009. The China Banking Regulatory Commission requires stock-holding banks to have a minimum 10 percent CAR and 8 percent of first-tier CAR.

Fitch Ratings lowered CITIC Bank's rating on the grounds of mounting risk associated with massive new lending in 2009 and lower CAR as a consequence. Despite the downgrade of CITIC Bank and China Merchants Bank, China's central banks claimed that the two banks were sound and healthy. On March 4, Moody's upgraded the rating of CITIC to "stable."

(Translated by SHX)

Full article in Chinese: http://finance.caing.com/2010-03-09/100124028.html