Linklaters advised Bank of China (“BOC”) on its landmark CNY39.94 billion (USD6.5 billion) issue of RMB-denominated US Dollar settled 6.75 per cent. offshore preferences shares. This innovative transaction is:

  * the first ever Basel III compliant Additional Tier 1 Capital issuance by a PRC bank
  * the first ever preference share issuance by a PRC company
  * the largest ever international regulatory capital issuance by a PRC bank
  * the largest ever AT1 issue in the world after the implementation of Basel III
  * the largest ever fixed income issuance under Reg S only

 BOC will use the proceeds to bolster its capitalisation. The offshore preference shares when issued will qualify as Additional Tier 1 Capital of the Bank in accordance with China Banking Regulatory Commission regulations. The transaction was priced on 15 October 2014. Closing is scheduled on 23 October. The offshore preference shares will be listed on the Hong Kong Stock Exchange and become the first ever listing of preference shares on the HKSE. 

The Linklaters team was led by partners William Liu, Teresa Ma and Andrew Malcolm, with support from managing associate Terence Lau. 

“We are very pleased to assist our long standing client Bank of China on such a ground breaking landmark transaction. It sets the template for the recapitalization of China’s banking sector, most significantly with foreign capital,”  said William Liu.