The controversial refinancing plan by the Shanghai Pudong Development Bank (SPDB) was approved by its shareholder meeting on Wednesday, meaning an influx of no more than 800 million yuan ($114 million) shares may further weaken the market sentiment.
Some 89.79 percent of the shareholders backed on the plan, which aims to use the entire proceeds to boost the capital base and increase capital adequacy ratio. The bank, in which Citigroup holds a 3.8 percent stake, is expected to raise around 26.06 billion yuan from the sale if based on its closing price of 32.58 yuan at the Shanghai Stock Exchange on Tuesday, lower than the earlier rumored figure of 40 billion yuan.
Bank president Fu Jianhua expected at the meeting that the net profit this year will surge more than 50 percent to 10 billion yuan.
The mid-sized bank also looked to issue bonds worth six billion yuan, according to the budget plan delivered to the shareholders. The capital adequacy ratio will surpass 12 percent after the share and bond sales are completed.
The bank's capital adequacy ratio fell to 9.15 percent at the end of last year from 9.27 percent one year ago, which forced the bank to seek more capital from the market.
The regulator told listed firms to "carefully consider the size and timing of refinancing" in response to market concerns about massive share sale plans by listed companies including Pudong Bank and China's second largest life insurer Ping An Insurance.
Previous talk that 26 listing companies planned to refinance billions of capital over stock markets had sparked market concern over liquidity and triggered panic selling.
Shares of Pudong Bank slumped near 30 percent by Wednesday since February 20, when market talk emerged the bank intended to raise up to 40 billion yuan.
Trading was halted on Tuesday because of the meeting and will resume on Thursday.
(Xinhua News Agency March 20, 2008)