China's Shenzhen Bank to boost capital with bonds

China's Shenzhen Development Bank <000001.sz> said on Friday it had obtained approval from the banking regulator to issue up to 7 billion yuan ($986 million) of subordinated bonds in the interbank market.

The proceeds would be issued to boost the bank's capital. Rapid growth of its business left Shenzhen Bank's capital adequacy ratio at 5.8 percent at the end of last year, well below the 8 percent regulatory minimum, the bank has estimated.

The official Securities Times reported that the bond issue would raise Shenzhen Bank's capital adequacy ratio above 8 percent for the first time since 2003.

The bank has found it difficult to raise capital in recent years partly because of delays in converting its non-tradable shares held by the state into tradable shares.

The bank's share price has plunged more than 20 percent this month, partly because of rumours, which it denied, that it planned a big issue of new shares to boost capital.

($1 = 7.1 yuan)