Ping An Bank Co Ltd would be selling shares worth CNY 14.8 billion to its parent firm Ping An Insurance Co of China Ltd. A filing in the Hong Kong bourse showed that Ping An Insurance would be buying up to 1.32 billion new shares from its subsidiary bank. The shares would be priced at CNY 11.17 each. The deal would increase Ping An Insurance's stake in Ping An Bank to 59% from its current 52.38%.
The proceeds would be used by the bank to restock its core capital funds. It would also be used to enhance Ping An Bank's capital adequacy ratio so that it can comply with stricter regulatory requirements. The deal is still subject to the approval of regulatory authorities.
According to a Reuters report, big banks in China are normally well-funded when compared with their counterparts worldwide. However, this is not the case for smaller banks like Ping An. Mid-tier Chinese lenders have to contend with capital shortfalls as new regulations require them to have more capital, Reuters added.
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