Fundraising pressure to be heaped on AgBank?

27 April 2011

The Agricultural Bank of China (AgBank) could be about to face considerable fundraising pressure, it has been suggested.

Reuters reports that China's third-biggest lender by assets may be affected because strong lending hampers its capital base.

James Liu, an analyst at CIMB Research in Hong Kong, said: "Compared to the other lenders such as ICBC and CCB, AgBank could face fundraising pressure within the next three years to shore up its adequacy ratio."

The industry figure explained that it appears the institute's loan growth will be higher than that experienced at other banks.

He noted this scenario is likely to deplete the bank's capital base at a quicker rate.

The comments come as rising inflation in China has resulted in added pressure being placed on the country's banks to control lending.

An expert who declined to be named recently told Bloomberg News that banks in China could have to raise around 860 billion yuan ($131 billion) of equity before 2016 in order to meet tightening capital rules.

By Asim Shah

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