China Construction provides $140M cash infusion for NZ unit

Friday 22nd July 2016

China Construction Bank, that nation's second-largest lender, has provided $140 million of equity capital to its New Zealand subsidiary to help fund lending growth, the biggest such infusion since the local unit was established with $58.6 million in 2014.

China Construction Bank (New Zealand), which counts former prime minister Jenny Shipley and former PwC chair John Shewan among its five directors, issued 100 million to its parent this month, tripling shares on issue to 158.6 million, according to the Companies Office. That brings its total capital position to about $200 million.

The local bank's lending has surged since it was established, with the loan book growing to $378 million as at March 31 from about $16 million at Dec. 31, 2014. Of that, about $274 million, or 72 percent, was commercial loans and $105 million was home loans, the bank's latest disclosure statement shows. Total assets stood at $415 million.

"Our ambition has always been to grow a full-service bank in New Zealand and our success to date has justified the initial investment and has now necessitated a further capital injection to support the next phase of our story," CCB said in a statement.

The lender's growth "has been centred on following trade, people and capital flows in and out of China and New Zealand," it said. "We have successfully supported New Zealand clients from large New Zealand corporates to high net worth individuals."

CCB is China's largest infrastructure lender and said in its statement that it had "brought this competency and appetite and will look to support New Zealand’s growing infrastructure requirements over coming years."

Customer deposits as at March 31 were $73.4 million and the local lender also has about $127 million of domestic bonds on issue. In April it issued $15 million of medium-term notes.

The bank's chief executive Xu Changning resigned in May, effective June 30, and a search is underway for a replacement.

The Beijing-based parent bank, established in 1954, now has 14,650 branches in mainland China and services about 3.1 million corporate customers and 291 million individuals, according to its website. Offshore its has branches and subsidiaries in 25 countries, including the US, Japan and South Africa.

Its Shanghai Stock Exchange-listed shares have fallen about 13 percent this year to trade recently at 5.03 yuan, matching the CSI 300 Index's decline and valuing the bank at about US$175 billion. The stock is rated a 'buy' based on the consensus of 15 analysts surveyed by Reuters.

BusinessDesk.co.nz

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