BoCom slashes rights issue plan by 20%

Downsizing to $4.8bln from $6.14bln may prompt AgBank to lower its $30bln target.

Bank of Communications (BoCom) said on Monday it could still meet its capital needs after slashing its fundraising plan to take account of weak markets, in a move that bodes ill for rival AgBank's giant IPO.

BoCom said the rights issue plan, cut by 20 percent on Sunday, will suffice for the next three years and has fully taken into account investors' interests in a weak stock market.

The downsizing underscores the harsh reality Chinese lenders face as they rush to raise billions of dollars to replenish capital, and could trigger similar moves by rivals, including Agricultural Bank of China, which is preparing for what could be the world's largest IPO aimed at raising as much as $30 billion.

"BoCom's move reflects current market conditions as well as investor concern toward banking stocks," said Qiu Zhicheng, analyst at Haitong Securities in Shanghai. "The market is forcing banks to scale back their fundraising and AgBank may have to lower its target as well."

BoCom, China's fifth-biggest lender, said in February that it planned to raise as much as 42 billion yuan ($6.14 billion) through a 1.5-to-10 rights issue, but on Sunday revised down the capital raising target by one fifth, to 33.1 billion yuan.

"Our revised fundraising target can meet our capital needs while also enabling our shareholders to make higher investment returns," Executive Vice President Qian Wenhui told reporters in Shanghai.

View the full story in Reuters.