ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Companies

China Bohai Bank fails to excite on Hong Kong IPO debut

Lender's shares drop below offer price in initial trading

HONG KONG -- Standard Chartered-backed China Bohai Bank fell below its offer price on its debut after raising $1.78 billion in an intial public offering on Thursday, marking Hong Kong's largest primary share listing so far this year.

Shares in the lender, based in the north-eastern port city of Tianjin, were trading at 4.76 Hong Kong dollars in early trade. They opened flat at HK$4.8 and fell as low as HK$4.74. The city's Hang Seng Index was down 0.5%.

If shares don't recover, the bank will join seven other listings in Hong Kong this month that have dropped below the offer price on listing day. Bohai is the only one with a market valuation of more than $1 billion. The city has hosted 23 listings so far this month with two stocks more than doubling in value.

Bohai was forced to price its offering towards the bottom end of the range of between HK$4.75 and HK$4.98. This is despite soaring mainland stocks and new IPOs in Hong Kong and the mainland surging on debut.

A person familiar with the matter said the tight pricing factored in the general nervousness in the market amid another wave of coronavirus infections in Hong Kong and elsewhere.

Bohai plans to use the IPO proceeds to strengthen its capital base. S&P Global Ratings said in January that the bank was one of a number of Chinese lenders coming under capital stress as their loan books weakened.

China's banking watchdog over the weekend warned of a sharp rebound in bad loans due to the coronavirus pandemic and encouraged banks to boost profit retention to accumulate capital.

Some small and midsize financial institutions are facing deteriorating asset quality and accumulated risks, the China Banking and Insurance Regulatory Commission said, adding that banks face a combined shortfall of at least 350 billion yuan ($50 billion) in bad-loan provisions to meet a minimum regulatory requirement.

Bohai, set up in 2005, posted a 15.7% rise in net profit last year to 8.19 billion yuan ($1.16 billion) and had 1.12 trillion yuan in assets as of March 31.

Its core tier 1 capital adequacy ratio, a regulatory measure of balance sheet strength, stood at 8.06% at the end of 2019, down from 8.61% a year earlier.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more