Shenzhen Development Bank Co. Chairman Frank Newman said the foreign-controlled lender had informally proposed a new share-reform plan to China's securities regulator in recent weeks.

If approved, the plan would bring it closer to raising much-needed capital. The midsized Chinese bank has been unable to complete an agreement to sell a 7% stake to General Electric Co. (GE) for $100 million struck in October 2005 because regulators banned fund-raising activities by domestically listed companies that haven't completed a reform of their shareholding structure.

Shenzhen Development Bank's tradable shareholders in July rejected a plan submitted by the banks' nontradable shareholders, of which Newbridge Capital is the largest with a 17.89% stake that would have compensated tradable shareholders for large fluctuations in the bank's share price following the floating of nontradable shares. Newbridge Capital is the Asian arm of U.S. private-equity firm Texas Pacific Group.

Chairman Frank Newman said the bank's draft plan would also include issuing call warrants, which aren't allowed to be part of share reform under regulations, but would be issued immediately after the plan was passed. The flotation of the nontradable shares would put additional shares on the market, possibly adding to the liquidity of the issue and driving down its price.

In 2005, China's securities regulator required all listed companies in the country to make all shares fully tradable, aiming to complete the reforms by the end of last year. Most major listed Chinese companies have completed share reform.

In contrast with many listed firms whose nontradable shares made up a majority of their outstanding shares, Shenzhen Development Bank's nontradable shares, which include Newbridge Capital's stake, represent just 28% of its outstanding shares.

Shenzhen Development Bank's capital adequacy ratio was just 3.59% at the end of September, far below the regulatory minimum of 8%, preventing it from expanding its branch network.