China's Bank of Communications may try to raise four billion US dollars through a rights offering to strengthen its balance sheet, a report said Thursday.
A massive lending boom by Chinese banks has left many of them with a reduced capital base.
BoComm, one of China's biggest lenders, has asked investment banks to submit proposals for the offering in Shanghai or Hong Kong, where the bank is already listed, the Financial Times reported, citing people familiar with the matter.
A rights offering typically allows shareholders to buy additional company stock at a discounted price during a set period of time.
If the deal is completed, UK-based HSBC may be forced to spend several hundred million dollars to maintain its almost 20 percent stake in BoComm, the paper said.
BoComm officials in Hong Kong and Beijing could not be immediately reached for comment.
The bank's capital adequacy ratio — a key measure of financial strength — was the lowest among China's six largest publicly traded banks as of September last year, it added.
The country's banking regulator has told financial institutions to cut back on their loans over concerns about soaring inflation and bubbles developing in the stock and property markets.
In January, China hiked the minimum amount of money that banks must keep in reserve and took other steps that analysts said were aimed at curbing lending.
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