A non-public offering plan was approved by the Board of Directors of the Industrial Bank
On July 29th, 2016, a non-public offering plan was approved by the Board of Directors of the Industrial Bank. TheIndustrial Bank plans to sell its non-publicly traded stock to Fujian Provincial Department of Finance, China National Tobacco Corporation, Branch of China National Tobacco Corporation in Fujian province, Branch of China National Tobacco Corporation in Guangdong province, Yango Holdings Company and Fujian Investment& Development Group Co., Ltd. and raise a fund of less thanRMB 26 billion. The fund raised, with the deduction of the involved issuance fees, will be used for complementing the common equity tier 1 capital of the Industrial Bank.
Enhance capital strength, meet regulatory requirements and promote the implementation of the company’s strategic objectives
According to the Basel III, China Banking Regulatory Commission’s capital regulation on commercial banks becomes more stringent. To continue to meet the regulatory requirements of capital adequacy ratio is of increasingly strategic importance to the development of the commercial banks.
At present, China’s economy has entered a new normal with economy and financedeveloping in a generally stable way and the supply sidestructural reform moving forward in an orderly manner. In the next few years, the domestic and foreign development environment is still complicated but China’s economywill face various structural opportunities andthe commercial banks can accomplish much, for example, the development of emergingindustrieswill bring forthnew opportunities of incremental business, and the development of new technology and new forms of industryprovides more options concerning technology and mode for the financial enterprises to reduce the costs and improve their service.
The Industrial Bank fully researches and judges the internal and external economic situation and its own business development, and takes advantage of this non-public offering toconsolidateits capital strength, steadily promotean integrated and international strategic layout that isgroup-geared andactively respond to the challenges and opportunities in the external environment.
The offering plan takes into account the interests of all parties and the main shareholders are firmly and constantly confidentabout increasing the market value
The Industrial Bank’s adopting non-public offering to supplement its capital isthe result of taking into account the oldand new shareholders, the regulators, the capital marketand its own development, and fully weighing the interests of all parties. The mainfund comes from the company’s original shareholders, which reduces the impact on the secondary market; its issuance and pricing follow the relevant regulations and the price is 98.14% of average price of 20 business days prior to the announcement of the resolution made by the Board of Directors, higher than90% of the regulatory requirements; the price of issue basically equals thestock price of the secondary market of the Industrial Bank and the involved parties agree that no adjustment will be madein spite of the cash dividend.
Of particular note, the non-public offering is supported by the main shareholders, such as Fujian Provincial Department of Finance andChina National Tobacco Corporationand it has a lock-up periodof five years, reflectingits confidence about the value of long-term investment in the Industrial Bank and the future development.
Adhere to balancinginternal capital accumulation and returns for the shareholder and continue to enhance thecapital management
Over the years, all businesses of the Industrial Bank have maintained a stable, sound and coordinated development trend and the asset and profitability have gained rapid growth. By the end of 2015, the total asset of the Industrial Bank has reached 5.30 trillion yuan, the balance of deposits 2.48 trillionyuan, common stockholders’ equityattributable to the parent company 287.743 billion yuan, and net profitattributable to shareholders of the parent company50.207 billion yuan, which are 2.86 times, 2.19 times, 3.13 times, 2.71 times of that of the end of 2010respectively.
The Industrial Bank always adheres to theprinciple of capital supplement, which is “internal accumulation comes first, affiliated by the external complement”. From 2010 to 2015, it complemented over 150-billion-yuan common equity tier 1 capitalthrough profit retention; actively developednew capital instruments,replenished capital strength by various ways and optimized the capital structure; continued to strengthen the comprehensive capital management and adhere to intensive development of the capital; reasonably and effectively allocated risk assets andelevated the rate of return.
The Industrial Bank attaches great importance to repaying the shareholders with the accumulative cash dividend exceeding50 billion yuanfrom 2007 to 2015. When examining the non-public offeringplan, the Board of Directors extended its promise of dividend ofthe past three years and also pledged that in the next three years (2016 to 2018), the proportion of annual cash dividends for common shareholders will be no less than 20%.
Over the past several years, the Industrial Bank has always been in the forefront of the industry in terms of rate of return on net assets. This non-public offeringwill help the Industrial Bank boost capital strength, consolidate and expandthe status and advantages of traditional businesses, cultivate and develop emerging strategic businesses, and enhance the overall strength of the Industrial Bankand its comprehensive competitiveness.