(Xinhua)
Updated: 2008-02-21 13:58

Shanghai Pudong Development Bank Co confirmed Thursday that it plans to sell additional shares to boost core capital.

The bank would disclose details of the share sale plan, which was yet to be decided, after a meeting of its board of directors in the near future, it said in a statement to the Shanghai Stock Exchange.

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The plan would be subject to approval at a shareholders meeting in March after being approved by the board of directors later this month, Thursday's Shanghai Securities News reported.

Capital adequacy ratio in the Chinese partner of Citibank fell to 8.4 percent, near the required minimum level of eight percent, by the end of the third quarter last year after rapid business expansion.

The bank did not rule out the possibility of equity investment in the future, the newspaper cited an unnamed senior bank official as saying.

"For example, even if it intends to invest in an insurance firm, the bank needs regulatory approval for the pilot program," the official said.

A share sale worth 20 billion yuan was reasonable, and a huge capital input would dilute the earnings per share, analysts said.

Shares in the mid-sized bank dived by the 10-percent daily limit on Wednesday on market talk that it planned to raise 40 billion yuan ($5.6 billion) by public offering. The shares fell more than five percent shortly after a one-hour suspension on Thursday.

The talk dampened investor sentiment by adding liquidity concerns and sank the key Shanghai Composite Index by 2.09 percent on Wednesday. The index dropped another 1.4 percent at 11:00 am on Thursday.

Shares in Ping An Insurance, China's second largest life insurer, have plunged more than 25 percent since it announced on January 21 the issue of 1.2 billion A shares and up to 41.2 billion yuan worth of convertible bonds.