Three Chinese Banks Launch A-Share IPO’s Since Start of 2019, Waiting List Shrinks to Two Year Low

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A-share IPO’s of Chinese banks have accelerated markedly since the start of 2019, as Beijing paves the way for improvements to the capital standing of domestic lenders.

Commercial bank IPO’s in China have returned with a vengeance since the start of 2019, with three A-share listings in just the past two months.

These include Bank of Zijin (紫金银行), Bank of Qingdao (青岛银行) and Bank of Xi’an (西安银行), while Qingdao Rural Commercial Bank (青岛农商行) is on the verge of launching a new round of share subscriptions.

The latest spate of listings compares to just three IPO’s for Chinese banks in 2018, including Bank of Zhengzhou, Bank of Changsha and Bank of Chengdu, and only one bank IPO in 2017 for Jiangsu Zhangjiagang Rural Commercial Bank (张家港行).

The last time China saw such a spate of bank IPO’s was in 2016, with eight Chinese lenders including Bank of Jiangsu joining the A-share market that year.

The 15 Chinese banks that have listed since 2016 have all been small and medium-sized lenders, including municipal commercial banks and rural commercial banks, given that China’s big five state-owned banks and the vast majority of national joint-stock banks have already joined the A-share market.

Since late 2018 the Chinese central government has flagged greater support for domestic banks to improve their capital standing.

A special meeting of the Financial Stability and Development Commission held in December looked at multiple channels for commercial banks to boost capital, while an executive meeting of the State Council held on 11 February passed a resolution in support of such measures.

Beijing has since allowed Chinese banks to issue perpetual bonds to improve their capital position, as well as launched central bank bill swaps (CBS) in a bid to improve the liquidity of these instruments.

The latest round of listings has taken the number of commercial banks waiting in line for their A-share IPO’s to the lowest level in nearly two years.

Data from the China Securities Regulatory Commission (CSRC) indicates that as of last weekend there were 11 Chinese banks on the wait list, with seven planning to list in Shanghai and four in Shenzhen.

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