China Minsheng Bank IPO Slides 3 Pct In HK Debut

HONG KONG (AP) — Shares of major lender China Minsheng Banking Corp. slid more than 3 percent in their first day of trade in Hong Kong Thursday amid anxiety this year's stimulus-fed credit surge might weigh on the industry's profits.

Minsheng's stock closed down 3.2 percent to 8.79 Hong Kong dollars after the company raised some $3.8 billion in Hong Kong's biggest initial public offering of the year. Shares had been sold at HK$9.08, near the middle of a range of possible prices.

Analysts attributed the lackluster debut to a combination of bad timing, high price and worries Minsheng and other banks may need to raise more money to offset any bad loans resulting from China's enormous stimulus-fed credit boom.

Bank of China, for example, was studying "various options" for raising more capital, according to a Wednesday report in the China Securities Journal.

This week, regulators ordered Chinese banks to control lending and manage risks better. They said banks with low ratios of capital to outstanding loans and no plans to remedy the problem could face restrictions on their business.

But regulators denied recent news reports the government was planning to raise the ratio of the minimum amount of required capital — a standard way to cushion losses from souring loans — to 13 percent from the current 11 percent.

Minsheng, based in Beijing, was the first Chinese lender to include private companies as shareholders and holds a large stake in U.S.-based bank UCBH Holdings Inc.

(This version CORRECTS stock's percentage decline to 3.2 percent.)

>To order reprints of this article, click here: Reprints