China Citic Bank Corp plans to raise up to 26 billion yuan ($3.8 billion) in a rights offer to replenish capital, it said yesterday.

The bank will offer up to 2.2 shares for every 10 held to existing shareholders, for as many as 8.59 billion shares in Shanghai and Hong Kong, the bank said in a filing to the Shanghai Stock Exchange yesterday.

The rights offer, which is not open to new investors, is pending approval from shareholders and regulator.

Citic Bank is among a slew of domestic lenders dashing to raise capital after banks have run up a record in loan disbursal since 2009.

The country's five biggest state-owned banks have a combined capital raising offer of $60 billion while smaller banks such as China Merchants Bank and China Everbright Bank have also joined rush to raise money.

Citic Bank's capital adequacy ratio, the main gauge of financial strength, sat at 10.95 percent at the end of June, down from 14.32 percent at the end of 2008 before China saw a record credit flow of 9.6 trillion yuan in 2009.

The Beijing-based bank's capital adequacy ratio was above the regulatory minimum of 10 percent for smaller banks. However, it still needs the backup of capital to propel further growth.

Meanwhile, the banking affiliate of China's biggest investment banking group yesterday said its first-half profits gained 45 percent year on year to 10.7 billion yuan.

"The bank's interim report is better than expected mainly due to its improving ability to cut credit costs," Sinolink Securities Co said in a research note yesterday.

Its credit cost sat at 0.29 percent, down from Sinolink's expectation of 0.56 percent.

(Shanghai Daily August 13, 2010)