On May 18, Bank Of Nanjing Co.Ltd(601009) the largest shareholder held 2.33% more shares of the bank in total. What the market pays attention to is that this result is not completely realized through the increase of holdings in the secondary market.
Originally, BNP Paribas, the largest shareholder of the bank, increased its shareholding of Bank Of Nanjing Co.Ltd(601009) shares by means of convertible bonds into shares on May 17, with an increase ratio of 1.42%. The previous day, Bank Of Nanjing Co.Ltd(601009) just announced that BNP Paribas’s shareholder qualification was approved. Stimulated by the signal of increasing shareholding of major shareholders, on May 17, Bank Of Nanjing Co.Ltd(601009) share price once rose by 5.42%.
As major shareholders increase their equity by converting convertible bonds into shares, it will not cause great disturbance to the secondary market like fixed increase, allotment and other methods. The market believes that this is a relatively “hidden” means. Before that, only a few banks such as Bank Of Ningbo Co.Ltd(002142) etc. have adopted it.
The Bank Of Nanjing Co.Ltd(601009) previous announcement also released such a signal: next, other major shareholders of the bank may increase their holdings in this way.
favored by foreign shareholders
On May 18, Bank Of Nanjing Co.Ltd(601009) announced that the company had received the notification letter from BNP Paribas, the largest shareholder of the bank, that BNP Paribas and Bank of Paris (QFII) had increased their shareholding in the company by more than 1%.
After the change of equity, the proportion of shares held by BNP Paribas and Bank of Paris (QFII) increased from 14.04% to 16.37%, with an increase of 2.33%, more than 1%, and promised not to transfer the increased shares within 5 years from the date of acquisition.
announcement shows that BNP Paribas increased its holdings of Bank Of Nanjing Co.Ltd(601009) shares by means of convertible bonds to shares on May 17, 2022, with an increase ratio of 1.42%
During the period from August 20, 2021 to September 6, 2021, Bank of Paris (QFII) accumulatively increased its holdings of Bank Of Nanjing Co.Ltd(601009) shares by means of centralized bidding trading with its own funds through the trading system of Shanghai Stock Exchange, with an increase ratio of 0.91%. BNP Paribas and Bank of Paris (QFII) increased their holdings by a total of 2.33%.
Last June, Bank Of Nanjing Co.Ltd(601009) publicly issued 20 billion yuan of convertible corporate bonds (hereinafter referred to as “Nan Yin convertible bonds”) to the public and went public on July 1. As a single major shareholder, BNP Paribas actively participated in the subscription of Bank Of Nanjing Co.Ltd(601009) convertible bonds.
At the performance presentation meeting in 2021 and the first quarter of 2022, Bank Of Nanjing Co.Ltd(601009) executives said: “BNP Paribas, as the single largest shareholder and long-term strategic partner of Bank Of Nanjing Co.Ltd(601009) has always paid attention to the development of Bank Of Nanjing Co.Ltd(601009) since 2005. BNP Paribas also continued to provide multi-level support. For example, BNP Paribas actively participated in the subscription of Bank Of Nanjing Co.Ltd(601009) convertible bonds at the equity level.”
According to the annual report, by the end of 2021, BNP Paribas had held 1.853 billion yuan of convertible bonds of Bank of South China, accounting for 9.27%.
Bank Of Nanjing Co.Ltd(601009) and BNP Paribas participated in the acquisition of Suning consumer finance. According to the announcement on March 7 this year, Bank Of Nanjing Co.Ltd(601009) paid 341 million yuan to acquire 36% equity of Suning Xiaojin held by Suning.Com Co.Ltd(002024) group, and BNP Paribas paid 28.38 million yuan to acquire 3% equity of Suning Xiaojin held by Suning.Com Co.Ltd(002024) group. In addition, Bank Of Nanjing Co.Ltd(601009) transferred 5% equity of Suning Xiaojin held by Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) for 47.3 million yuan. After the acquisition, Bank Of Nanjing Co.Ltd(601009) holds 56% of Suning Xiaojin as the largest shareholder, and BNP Paribas holds 18% as the second largest shareholder.
other major shareholders or follow-up shareholding increase
“The convertible bonds issued last year have now entered the stock conversion period. We hope to realize rapid stock conversion and provide sufficient capital guarantee on the basis of steady improvement of operating performance and in the process of steady improvement of stock price and market value. This is our goal.” At the performance presentation meeting in the first quarter of this year, Bank Of Nanjing Co.Ltd(601009) executives expressed their expectations for shareholders’ convertible bonds to shares.
However, as of the end of the first quarter, the proportion of convertible bonds of Bank of South China was less than 1%, and the vast majority of convertible bond holders did not convert shares.
According to the announcement information, the start and end dates of the debt to equity conversion period of Bank of South China are set from December 21, 2021 to June 14, 2027. According to the data, as of March 31, 2022, the cumulative number of converted shares accounted for 0.0840% of the total number of A-share common shares issued by the company before the conversion of Nanyin bonds into shares; The proportion of Bank of South China convertible bonds that have not been converted into shares in the total issuance of Bank of South China convertible bonds is 995754%.
According to the annual report of 2021, Nanjing Zijin investment group, Jiangsu Transportation Holding Co., Ltd. (hereinafter referred to as “transportation holding”) and BNP Paribas respectively held 2.384 billion yuan, 1.998 billion yuan and 1.853 billion yuan of Nan Yin convertible bonds, with holding ratios of 11.92%, 9.99% and 9.27% respectively.
What attracts the market’s attention is that Bank Of Nanjing Co.Ltd(601009) in the announcement released in April, the fourth largest shareholder of the bank, transportation holding, as a shareholder with a shareholding ratio of more than 5%, needs to obtain regulatory approval in advance if the shareholding ratio exceeds 10%, and the bank has received the reply on the qualification of transportation controlling shareholder.
The market expects that the subsequent transportation holding may also increase its shares in the bank by converting convertible bonds into shares.
“The approval of BNP Paribas’s shareholder qualification started the second round of industrial capital increase.” The Zheshang Securities Co.Ltd(601878) bank research team estimates that assuming that the shareholding ratio of BNP Paribas and transportation holdings reaches the upper limit of the regulatory approval, the total space for increasing the number of shares is estimated to be about 1 billion shares, with an increase amount of about 11.2 billion yuan, accounting for 21% of the Bank Of Nanjing Co.Ltd(601009) free circulation market value Zheshang Securities Co.Ltd(601878) believes that if BNP Paribas and communications Holdings (Jiangsu state-owned assets) increase their holdings, Nanjing State-owned Assets Department will not rule out the possibility of further increase if it wants to maintain the advantage of shareholding ratio.
bank convertible bonds to shares
In fact, as early as 2018, Bank Of Ningbo Co.Ltd(002142) state owned shareholders and foreign-funded shareholders staged a “struggle” to increase their holdings through convertible bonds.
At the end of 2017, Bank Of Ningbo Co.Ltd(002142) successfully issued 10 billion yuan of convertible bonds.
Ningbo Development and investment group, the two major shareholders of the bank, and overseas Chinese bank participated in the preemptive subscription, and secretly increased Bank Of Ningbo Co.Ltd(002142) shares through share conversion in the third quarter of 2018.
According to the data of the third quarterly report in 2018, the shareholding ratio of Ningbo Development and investment group increased from 20% in the semi annual report to 21.60%. According to the stock conversion data, Ningbo Development and investment group may choose the overall stock conversion in September of that year, thus increasing its shareholding proportion in Bank Of Ningbo Co.Ltd(002142) . Similarly, the overseas Chinese bank has reduced its holdings of 5 million convertible bonds, which is also consistent with its increased number of shares.
In the same case, as early as 2020, China Everbright Bank Company Limited Co.Ltd(601818) announced that in October of that year, Everbright Group, the controlling shareholder of the bank, increased its holdings of 1.543 billion A-share ordinary shares of the company by means of convertible bonds into shares.
commercial banks issue convertible bonds mainly for the purpose of replenishing core tier 1 capital. However, under the condition that convertible bonds do not have the condition of active conversion, promoting the early conversion of major shareholders holding convertible bonds is also one of the options to supplement the core Tier-1 capital
In 2022, Bank Of Nanjing Co.Ltd(601009) also issued an announcement that it plans to issue no more than 20 billion yuan of perpetual bonds.
“It is hoped that the promotion of these plans will provide capital guarantee for strategic development in the next two years.” Bank Of Nanjing Co.Ltd(601009) executives said.
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