The Shanghai-headquartered Bank of Communications Ltd (BoCom) had engaged international law firms Simpson Thacher & Bartlett and King & Wood Mallesons for the issuance of its 56.6 billion yuan ($8.9 billion) private share placement, which happened last week.
Listed on both the Hong Kong and Shanghai bourses, China’s fifth-largest bank is under regulatory pressure to replenish its core capital following its rapid loan expansion.
BoCom’s three largest shareholders— China's Ministry of Finance, China’s National Security Fund and HSBC Holdings —have signed up for the deal, according to a Reuters report.
The Chinese lender tapped into private placement to refrain from impacting its stock price by flooding the market with new shares.
The Reuters report stated that BoCom, in its listing document, had said that subscription from investors such as China’s finance ministry, which has signed up for shares worth $550 million, is a vote of confidence that will help boost the lender’s market image.
The Simpson Thacher team, which was led by Hong Kong-based partner Celia Lam, acted as the issuer’s international and Hong Kong counsel. Lam was formerly Linklaters’ co-managing partner of the Greater China region, and had advised on BoCom’s 2005 $1.8 billion HKEx listing.
Recently merged King & Wood Mallesons, meanwhile, acted as the lender’s PRC counsel in this issuance. In 2010, King & Wood and Baker & McKenzie were engaged as PRC and Hong Kong counsels respectively for BoCom’s issuance of $4.9 billion of shares to institutional investors such as HSBC.
China is mulling new regulations on banks' capital requirements which are likely to be launched by July 1, China’s 21st Century Business Herald reported last month.
BoCom, with its core capital ratio standing at 9.24 percent, has the lowest capital adequacy ratios among China’s five largest lenders which range between 9.36 percent and 10.57 percent.
China's public banks are expected to raise more than 100 billion yuan ($15.78 billion) through equity financing in 2012 to shore up their capital, the China Securities Journal had reported in December 2011.
