With initial public offerings still suspended on the nation's exchanges, six domestic joint-stock and city commercial banks are planning to go public in Hong Kong.

The offerings, which are expected to reach 130 billion yuan ($21.2 billion), are being planned by China Everbright Bank Co Ltd, China Guangfa Bank Co Ltd, Bank of Shanghai Co Ltd, Huishang Bank Corp, Harbin Bank Co Ltd and Bank of Chongqing Co Ltd.

IPOs on mainland exchanges have been frozen for nearly a year. The banks, which are among the many companies waiting to go public, are under pressure to raise new capital.

Banks are facing funding challenges, particularly given tougher asset regulations imposed by the China Banking Regulatory Commission in July 2012.

The CBRC said that globally systemically important banks must have a minimum capital adequacy ratio of 11.5 percent by 2015. Banks that are less exposed to global financial markets must achieve CARs in excess of 10.5 percent by 2018.

Banks must attract a total of 1 trillion yuan in new capital this year if they are to extend an estimated 9 trillion yuan in new loans while maintaining CARs of 12 percent, according to calculations by Sheng Songcheng, chief of statistics at the People's Bank of China.

In their interim financial statements, seven of the 15 banks listed in the A-share market reported declining CARs. Minsheng Banking Corp Ltd saw a decrease of 1.8 percentage points.

Ping An Bank Co Ltd, China Everbright and Hua Xia Bank Co Ltd said their CARs declined by about 1 percentage point.

Banks on the mainland face many challenges in raising funds, said Lian Ping, an analyst with Bank of Communications Co Ltd. Risk-weighted assets will continue growing fast, so if banks don't seek other financing channels, it will be hard for them to maintain sufficient capital.

No banks have gone public on mainland exchanges in the past six years. There are now 14 banks waiting for approval in the A-share market.

Bank of Hangzhou Co Ltd and Bank of Dongguan Co Ltd are still awaiting the results of reviews by the China Securities Regulatory Commission.

Huishang Bank, Bank of Shanghai and Bank of Jiangsu Co Ltd are still in the initial stages of the examination process.

On the CSRC website, Bank of Chongqing's status is shown as "suspended", and Bank of Dalian Co Ltd abandoned its application for an A-share IPO.

However, being listed in the H-share market is even more complicated. Applicants must first obtain the approval of the CSRC. They also face higher audit costs and increased disclosure requirements.

(China Daily USA 10/15/2013 page15)