Banks raise record $14b offshore

Chinese lenders have raised a record amount of funds offshore so far this year, and that trend is set to continue as banks replenish capital to meet regulatory requirements, analysts said.

Data from Dealogic LLC, a financial information platform, showed that domestic lenders have so far this year raised $14 billion offshore through bond issues. Chinese lenders raised about $9 billion in 2013 through bond offerings in overseas markets.

Many issues involve overseas branches or subsidiaries of Chinese banks offering bonds in overseas markets.

For example, the Hong Kong branch of Bank of Communications Ltd is offering yuan-denominated notes to institutional investors in three tranches: 1 billion yuan ($160 million) with a three-year maturity, 500 million yuan with a five-year maturity and another 500 million yuan with a seven-year maturity.

The notes will be sold to institutional investors and listed in the GreTai Securities Market in Taiwan.

Proceeds will be used for the branch's working capital and general corporate purposes, the bank said in an announcement.

China's banking regulators have set a deadline of 2018 for domestic lenders to meet the Basel III capital requirements, a voluntary global stress-testing standard. Under that standard, a bank's Tier 1 capital adequacy ratio should be 9.5 percent.

To meet this standard, China's lenders will need to raise a combined $160 billion, according to China banking analysts at Barclays Capital in Hong Kong.

Analysts said the balance sheets of China's lenders are healthy by international standards, although their nonperforming loan ratios and balances are both rising.

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