Friday, March 07, 2008

Shenzhen Bank says no new plan to issue shares

China's Shenzhen Development Bank said on Wednesday it has no new plans to raise capital, denying market rumours that had sent its shares tumbling the day before.

Noting that a private placement of shares with Baosteel Group was previously announced in December, the company said in a statement: "Excluding previously announced financing plans, the bank currently has no other capital-raising plans."

The bank also said it would incur a loss of no more than 30 million yuan ($4.2 million) due to an embezzlement incident involving a branch employee, but the impact on its overall financial situation would be insignificant.

The bank's shares fell 10 percent on Tuesday to 29.75 yuan, with some traders citing rumours that the bank may be planning a large equity issue to boost its capital ratio.

In early December, the bank said it had agreed to sell 120 million shares at a price of 35.15 yuan each to Baosteel Group, but traders had said the private placement should not affect the market price.

China's benchmark share index has fallen more than 17 percent since the start of the year due in large part to worries about new supply from large share issues, including a massive share and convertible bond issue planned by Ping An Insurance (Group) Co That issue could raise 125 billion yuan and will be put to a shareholder vote later on Wednesday.

Shenzhen Bank, a mid-sized Chinese lender, is partly owned by U.S. investment firm Newbridge Capital.

($1=7.106 Yuan)

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