2 China megabanks near bonds, shares offering launch

Country's securities regulator approved Bank of China bonds offering while it will review BoComm's proposal Friday.

Two of China's largest state-run banks are getting closer to multibillion-dollar sales of bonds and shares to shore up their balance sheets, after a surge in lending last year depleted banks' capital levels.

On Monday, China's securities regulator approved a proposal by Bank of China Ltd. to sell 40 billion yuan ($5.9 billion) of bonds convertible into Shanghai-listed shares, clearing the way for China's third-largest lender to tap fresh capital. In addition to the bond issue, the bank intends to sell new shares equivalent to up to 20% of its existing Hong Kong share capital to raise around $7 billion.

In a separate statement, the China Securities Regulatory Commission said it will conduct a review Friday of Bank Of Communications Co.'s plan to raise as much as 42 billion yuan ($6.14 million) in a rights issue in Shanghai and Hong Kong. In terms of assets, the Shanghai-headquartered lender ranks fifth among China's banking industry.

The securities regulator didn't give a timetable for the bond sale and the rights issue. But analysts said the lenders could complete the deals as early as June if the regulator approves both transactions. Shareholders of the two banks have approved the plans.

View the full story in the Wall Street Journal.