BOC, CCB to sell subordinated bonds

Two major State-owned banks will join other lenders and raise capital by selling subordinated bonds before the end of the year, as tougher capital requirements are expected to take effect at the beginning of 2013.

Bank of China Ltd, the country’s fourth-biggest commercial lender by market value, said in a statement on Thursday that it will sell subordinated bonds of no more than 23 billion yuan ($3.66 billion) in the inter-bank bond market.

According to BOC’s plans, which were released earlier, the round of subordinated bond sales will be implemented before Dec 31.

On the same day, China Construction Bank Corp, the world’s second-largest bank by market value, said it will sell 40 billion yuan of subordinated bonds starting on Nov 20.

Last week, the Bank of Ningbo said that it has been allowed by the central bank and the China Banking Regulatory Commission to issue subordinated bonds valued at no more than 3 billion yuan in the inter-bank market.

According to data compiled by Shanghai Wind Information Co Ltd, the Agricultural Bank of China plans to sell 50 billion yuan worth of subordinated bonds, while China Merchants Bank is gearing up to sell 23 billion yuan.

Huaxia Bank plans to issue 10 billion yuan worth of subordinated bonds, while China Minsheng Bank Corp hasn’t disclosed the amount but also announced similar plans.

In the first 10 months, a total of 13 banks have issued subordinated bonds in the inter-bank market, with a combined value of 60 billion yuan. In the last two months, the total issuance will likely exceed 140 billion yuan, according to statements of listed lenders.

China's banks sold a combined 330 billion yuan of subordinated debt last year.