HSBC buys BoCom H-shares


HSBC yesterday announced its subscription for about US$1.7 billion worth of new Hong Kong-listed shares of the Bank of Communications.

Shanghai-based BoCom, China's fifth-biggest lender, suspended trading of its shares yesterday as it announced a private placement of A- and H-shares in Shanghai and Hong Kong, according to filings with the bourses in the two cities.

HSBC first invested in BoCom in August 2004, and after the latest subscription its stake in the local lender will not be less than the 19.03 percent.

BoCom's biggest shareholder, the Ministry of Finance, which holds about 26.5 percent stake in the bank will also take part in the private replacement, said Bloomberg News yesterday.

As HSBC is viewed as a foreign bank, its participation is subject to certain conditions, including regulatory approval and nod from the shareholders of BoCom.

"The bank (BoCom) issued subordinated debt worth 26 billion yuan in October," said Liu Yang, a banking researcher at Shanghai Securities. "According to its present debt size and core capital balance, a capital replenishment of 55.7 billion yuan is needed."


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