Economy - Shareholders China Merchant bank rebel against emission


In a rare move shareholders have forced the China Merchant Bank to scale back a 10bn Renminbi convertible bond issue, report the Financial Times and Bloomberg today. In China most listed companies still have a government entity owning a majority of non-tradeable share. Rights of minority shareholders are mostly ignored. Up to today at the China Merchant Bank.
The bond issue, the largest in China up to now, has been scaled back to 6.5 billion Renminbi as current shareholders feared their share would be too much diluted. The investors accused the bank of 'illegal action', says the FT.
The China Merchant bank belongs to a promising group of second tier banks, that do not suffer under the burden of the planned economy and many bad loans that have plagued the four larger commercial state-owned banks. In some areas the China Merchant Bank want to take on foreign banks head on, for example in the credit-card business, where the Citibank has high hopes. In Taiwan the Citibank lost that struggle from domestic banks and the China Merchant Bank hired some years ago 60 Taiwanese bankers to fight off the Citibank's efforts to enter the Chinese financial market for credit cards.