HONG KONG: China Construction Bank (CCB), the country's largest property lender, said yesterday that it had received the go-ahead from banking regulators to issue up to 40-billion-yuan worth of subordinated bonds to raise its capital adequacy ratio.

The bank said in a statement carried in the Shanghai Securities News that the China Banking Regulatory Commission and the People's Bank of China approved the plan that the bank's shareholders endorsed in June.

Although the current market conditions make investors critically scrutinize every move a bank makes, some analysts believe CCB's finances are perfectly healthy, saying its bonds should be a preferred choice to those who are fed up with the near-zero interest rate.

"The bonds should appeal to investors, given the current deposit interest rate level," said Tony Tong, a banking analyst at China Everbright Research. "Chinese banks are among the safest lenders now."

CCB said in a statement last month that it would issue up to 80-billion-yuan worth of bonds with a maturity of at least 10 years.

It said the bond sale would help raise its capital adequacy ratio, as well as replenish supplementary capital of the bank. But the sale is subject to approval by shareholders, the China Banking Regulatory Commission and the People's Bank of China. It did not give further details.

Market watchers speculate that CCB might take a stake in Bank of America in a move of bottom fishing. The top US lender cashed out its strategic stake in the mainland bank and raised $2.83 billion.

Bank of America, which needs cash to cope with the tough economic conditions, sold 5.62 billion shares, or more than 2.4 percent, of CCB last month.

(HK Edition 02/04/2009 page2)