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Shanghai-listed China Minsheng Banking Corporation got its H-share issuing plan approved by the shareholder's general meeting Thursday, another step closer to the overseas listing that would further enrich its capital pool.
The scale of the H-share offering should no more than 20 percent of the bank's total shares, bank officials said.
The bank would step up preparation of the overseas listing and submit the application to the securities and banking authorities soon, said Minsheng President Dong Wenbiao.
Dong hoped the listing can be realized as early as possible, but it also depends on the market environment and the authorities' approval. He has said in December that the listing is likely in March and April.
"Right now we are also negotiating with a foreign institution that will be introduced as our strategic investor prior to the H-share issue," said Dong. But no details can be given now.
If approved by the authorities, Minsheng, the first and only private bank in China, would become the first commercial bank from the mainland to launch an overseas listing.
It would give a push to the domestic banking industry, which has confronted intensifying competition from foreign counterparts, who will have full access to the Chinese market by the end of 2006.
"We want to be more international to face the challenges and grasp the opportunities," said Gao Feng, head of Minsheng's overseas listing working panel.
"The introduction of overseas strategic investors and overseas listing can help us become more competitive," he said.
Listed on the Shanghai Stock Exchange at the end of 2000, Minsheng has experienced a fast expansion over the past few years, but also has a bigger demand for capital.
The proceeds of the H-share offering is expected to further increase its capital adequacy and will help cover the expenses of its new branches, facilities purchases and technological development, bank sources said.
Though no details of the exact scale and price of the H-share issue were revealed by the bank, analysts predicted the issue should be around 1 billion.
Minsheng's A-share investors attending the shareholders assembly Thursday in Beijing approved the H-share issue proposal with a 92 percent supportive vote. But many did have questions on the expected price gap between the bank's A shares and H shares and how their interest can be protected.
A-share prices are generally higher than H-share prices, triggering worries that the interest of the A-share investors may be eroded if the company also lists H shares.
"It is a rare case for an A-share company to issue H shares. Normally domestic companies would first issue H share and then come back the domestic capital market," said Tang Lihui, a researcher with Hua'an Fund Management Co.
The question is how to clinch a reasonable price of the expected H-share issue that can be accepted by both domestic and overseas investors, he said.
But since the Hong Kong stock market is in a bullish rally and mainland companies are very popular, Minsheng's H-share issue may also get warm response and move upwards, which can ease the pressure brought about by the price gap, he said.
"We can assure that the interest of our investors can be protected," Dong said yesterday, easing worries of existent shareholders of the bank.
The company plans to distribute its 2003 profits to its A-share owners only and transfer some of their dividends into new shares.
To develop its core competitiveness, it plans to build up advanced computer system to handle accounting, client resources, etc, according to Dong.
It will focus on the good-quality institutional clients as well as retail business, such as mortgage loans.
Now it is in talks with Wal-Mart and Carrefour to provide financial service support to their purchasing in China, said Dong.
Founded in 1996 in Beijing, Minsheng Bank possessed 359 billion yuan (US$43.4 billion) of total assets by the end of last September and realized net profits of 1 billion yuan (US$120.7 million) in the first three quarters of 2003.
(China Daily January 9, 2004)
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