China Merchants Bank mulls capital boost via external sources

The bank aims to grow its loans by 16% in 2011 as its capital adequacy ratio is lower than that of its major rivals.

China Merchants Bank Co. said Friday it is considering external means to replenish capital, following last year's CNY21.5 billion ($3.28 billion) rights issue, as the Chinese lender seeks to meet tougher capital requirements after the nation's government-led credit boom.

Chairman Fu Yuning told a news conference the bank is studying plans to replenish is capital but he declined to elaborate.

"We don't have a specific plan to disclose for now," he said, adding that the bank aims to grow its loans by 16% this year, down from the 21% growth in 2010.

China Merchants Bank's core capital adequacy ratio was at 8.04% at the end of 2010. Under new global rules--endorsed by leaders of the Group of 20 industrial and developing economies in November--banks' core capital, which comprises common equity and retained profit, must amount to at least 8.5% of their risk-bearing assets by 2019, more than double the current level.

View the full story in The Wall Street Journal.