Recently, the Shanghai Agricultural commercial bank updated the prospectus (draft declaration) on the website of the CSRC, and planned to issue no less than 964 million shares and no more than 2.893 billion shares. The net amount of raised funds will be used to supplement the core tier 1 capital.
The business performance of Shanghai Agricultural commercial bank increased steadily. According to the prospectus, in 2019, the banks operating revenue reached 21.271 billion yuan, up 5.59% year-on-year; the net profit attributable to the shareholders of the parent company was 8.846 billion yuan, with a year-on-year growth of 21.04%. By the end of 2019, the total assets of Shanghai Rural Commercial Bank Group was 930.287 billion yuan, which was the third largest agricultural commercial bank in China.
Also this month, the banks equity change was approved by the regulatory authorities. Shanghai Jiushi (Group) Co., Ltd. will transfer 734 million shares held by Shanghai International Group Co., Ltd., its related parties and persons acting in concert, accounting for 8.45% of the total equity of Shanghai Rural Commercial Bank. After the deal is completed, Shanghai Jiushi will be listed in the banks top 10 shareholders.
According to the relevant provisions, the total investment and shareholding proportion of a single domestic non-financial institution, its related parties and persons acting in concert shall not exceed 10% of the total equity of rural commercial banks. In its reply to the IPO of Shanghai Agricultural commercial bank last year, the Shanghai Banking and Insurance Regulatory Commission required the bank to complete the rectification of relevant equity issues before the formal issuance of a shares, so as to reduce the shareholding ratio of a single non bank shareholder and its related parties to less than 10% (inclusive). After the completion of the above equity transfer, Shanghai International Group, its related parties and persons acting in concert will hold 10% of the shares of Shanghai Agricultural commercial bank, thus clearing a barrier for the banks A-share IPO.
For a long time, a large number of rural commercial banks have been labeled as small scale, weak profit. However, after years of development, the strength of several leading agricultural commercial banks can not be underestimated. Among them, Chongqing Agricultural commercial bank, Beijing Agricultural commercial bank, Shanghai Agricultural commercial bank and Guangzhou agricultural commercial bank are the most powerful. Both in scale and profitability, they are far ahead of similar banks. The asset scale of Chongqing rural commercial bank has reached 1.03 trillion yuan; the asset scale of Beijing Agricultural commercial bank and Shanghai Agricultural commercial bank is close to the trillion yuan mark; even Guangzhou agricultural commercial bank, which ranks fourth, has reached 894.154 billion yuan, nearly double that of Dongguan Rural Commercial Bank, which ranks fifth.
In addition to Shanghai Agricultural commercial bank, the other three head agricultural commercial banks have also entered or are ready to land in the A-share market. These four head agricultural commercial banks are expected to gather in the A-share market in the future. Prior to this, Chongqing Agricultural commercial bank has successfully listed a + H shares in 2019. Guangzhou rural commercial bank is also in the A-share IPO queue. Although ABC has not yet joined the queue, it is also actively preparing for A-share listing. Beijing Agricultural commercial bank said in its annual report in 2019 that it will benchmark the standards of listed banks in 2020, improve the IPO working mechanism and related matters, and consolidate the IPO foundation.
11 agricultural commercial banks
Waiting for A-share IPO
Not only several big heads of agricultural commercial banks are actively listing, but those small and medium-sized agricultural commercial banks with good development situation are also rubbing their hands, hoping to gain valuable capital replenishment opportunities by landing on the capital market.
Zhang Haiyang, director of the Department of banking management at the University of international business and economic cooperation, said in an interview with Securities Daily that the development of many agricultural commercial banks is more than local, so there are not many large assets. Once listed successfully, agricultural commercial banks will not only help their own capital supplement, but also form a better incentive effect for similar banks.
According to the relevant data disclosed by the China Banking and Insurance Regulatory Commission, by the end of 2019, there were 4607 financial institutions in the banking industry, of which the number of agricultural commercial banks had reached 1478, with the largest number among the banking financial institutions, accounting for 32.08%. At the same time of quantity expansion, the asset scale and profit situation of agricultural commercial banks show the signs of gradually increasing gap between the first and the last. The assets scale and net profit of the top several agricultural commercial banks are tens or even more than 100 times higher than those of the same kind at the bottom of the list.
From the regional distribution point of view, the agricultural commercial banks queuing up for IPO are generally distributed in the economically developed coastal areas, which provides an economic basis for the development of local agricultural commercial banks. Although the scale of assets of these banks is temporarily limited, their performance growth is stable and their asset quality is generally good.
In an interview with Securities Daily, Dong ximiao said that agricultural commercial banks have become the main force of rural finance in China and the most important part of rural financial system. They should be supported to supplement capital through various capital instruments including listing on the stock market. By landing on the capital market, the capital strength of rural commercial banks will be enriched, the governance system will be more perfect, and the brand image will be gradually improved. Dong ximiao also stressed: for rural commercial banks, after listing, they should still adhere to serving the local economy and agriculture, rural areas and farmers, which can not be changed.