Don't bet the bank

30 March 2010 By Wei Gu

The sovereign wealth fund may be tempted to top up its investments in ICBC and peers as they raise funds. But CIC can get higher returns elsewhere, and public investors should be happy to make up the difference. Even with heavy dilution, the state’s majority stake looks secure.

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Industrial & Commercial Bank of China (ICBC) said on April 25 that it wants to raise $3.7 billion through the issue of a convertible bond, which would be convertible into its Shanghailisted shares. It also said it would request shareholder permission to increase its separately listed Hong Kong equity by 20 percent.

Bank of China revealed a similar plan in late January. BOC sought to raise $5.9 billion through the issue of a bond convertible into its Shanghailisted shares, and requested shareholder permission to increase its equity in Shanghai and Hong Kong by 20 percent.

China Construction Bank may also raise capital in 2010, according to its chairman, Guo Shuqing, speaking at a press conference on March 29. He added that there are no firm plans to raise capital at present, and no amount has been decided.

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