Dollars and yuan notes are seen at a bank on May 15, 2006, in Beijing, China. (Photo : Getty Images)
The Bank of Jiangsu, a mid-sized bank based in Nanjing, launched on Tuesday its online campaign to invite subscription of shares before its IPO release.
Offline and online subscriptions started to be available by Wednesday. The bank issued 1.15 billion shares at 6.27 or 64 cents per share. The total offering is expected to reach 7.24 billion yuan.
The listing was filed at the Shanghai Stock Exchange. According to the website of the China Securities Regulation Commission, a total of 14 banks are waiting for approval of their IPO.
There are already eight banks that were approved. Among others, Bank of Shanghai and Bank of Guiyang were already approved.
A senior official from the Agricultural Bank of China, Yu Fenghui, said that mid-level banks need to engage in an IPO to augment liquidity issues. Many banks need additional capital as non-performing loans (NFL) are increasing.
Yu said, "Raising capital through an IPO will help those banks alleviate liquidity pressure and make the situation not look too bad, but it won't solve their bad loan problems."
From 2013 to 2014, the bad debt ratio of the Bank of Jiangsu reached 14 percent. The ratio was already at 13 percent the preceding year.
Ivan Shi, a financial analyst from Z-Ben Advisors, said, "The economy hasn't been doing that well in the past few years especially for the sectors that the bank is involved in. The more worrying issue is the continued growth of NPLs over the past few years."
There is a bigger burden of NPLs among the larger banks. Banks such as Bank of China Ltd. are carrying the load of state-owned debts.
However, the Bank of Jiangsu assures its investors in its prospectus. It said, "In recent years, our bank has been continually increasing the intensity of write-offs, and accelerating the handling of nonperforming loans."
