On June 5 the Board of Directors of China Minsheng Banking Corp (CMBC) approved a resolution to issue H-shares and list on the Hong Kong stock exchange, according to a report by the China Securities Journal. Relevant officers from the CMBC said that it will restart the work of issuing H-shares four years after its previous attempt. A maximum of up to 3.818 billion shares will be issued on this occasion.

Shareholders of the bank will vote on topics relating to the issuance of H-shares at a temporary shareholders' meeting to be held on June 22. The resolution is still subject to approval from relevant regulators including the China Banking Regulatory Commission (CBRC) and the China Securities Regulatory Commission (CSRC), as well as from Hong Kong Exchanges and Clearing Limited.

The CMBC, established in January 1996 in Beijing, is China's first joint stock commercial bank with shareholders mainly comprising of non-state-owned enterprises. It went public in Shanghai in 2000.

According to the CMBC website, the bank's total assets stood at 1.0544 trillion yuan at the end of December 31, 2008. It recorded 785.8 billion yuan in total savings and 658.4 billion yuan of total lending (including discount bills). The bank generated a net profit of 7.885 billion yuan in 2008, with a return on net assets of 15.11 percent and a non-performing loan ratio of 1.20 percent.

In the second half of March this year, the CMBC successfully issued 5 billion yuan worth of hybrid capital bonds, but the pressure to further replenish its capital base still exists. The company's Board of Directors has therefore officially decided to issue H-shares and list on the main board of the Hong Kong stock exchange.

The CMBC noted that this offering will enable it to have two financing platforms - the A-share market and the H-share market - and boost its capital base, raising the capital adequacy ratio. The move will also help the bank to enter the international capital market, further improve its corporate governance, and increase overseas influence and brand recognition.

The CMBC believes that at present, international large-sized institutional investors are optimistic about China. In particular, they have a strong desire to invest in stock in China's financial sector.

With the stock market picking up since the second quarter, Hong Kong's IPO (Initial Public Offering) market has also gradually become more vigorous. Meanwhile, overseas funds are forcefully flowing back to Asian regions, especially to the Hong Kong market, giving sustained financial support to the rebound of the local stock market.

Hong Kong's Hang Seng Index rose 33.2 percent since March 1, while the Hang Seng H-Share Index rose 41.8 percent in the same period.

By People's Daily Online