Bank of China Looking to Boost Supplementary Capital

Bank of China Ltd, the Asian powerhouse's third biggest lending bank according to market value, has revealed that it may consider raising new funds for the advancement of the bank's non-core capital, if the new regulatory policies put limits on lenders.

President Li Lihui today said that the lurking enforcement of a new requirement by the country's banking supervisory body, would affect Bank of China's capital ratio in an adverse manner.

After a record high credit growth in 2008 and 2009, Chinese banks sold convertible bonds and stocks, and gathered $72 billion through it in 2010. On February 23 last month, the China Banking Regulatory Commission announced that it is considering the support of new capital regulations, derived from the contents of Basel III agreement.

At the National People's Congress today, Li said that according to their projections, the growth in institutional lending and social financing will be less than last year. He also mentioned that the Chinese central bank's ratio and regulatory policies are placing considerable restrictions on banks. Li also voiced that selling shares in order to boost its core capital is not high on Bank of China's agenda. He didn't confess any more details about the fund raising process being considered by the bank, whose tier-one core capital ratio at the end of September 2010 was at 9.35%, while its overall capital ratio was slightly higher at 11.73%.