Linklaters has advised Bank of Communications Co., Ltd. (“BOCOM”) on its issuance of US$1.2 billion 4.50 per cent. Tier 2 Capital Bonds due 2024 and EUR500 million 3.625 per cent. Tier 2 Capital Bonds due 2026. The Basel III compliant Tier II instrument is the first international regulatory capital issue by a mainland Chinese financial institution, the largest ever international regulatory capital offering by a Chinese related financial institution and the first to be issued in Euro and US dollars. 

BOCOM will use the proceeds to strengthen its capitalisation. The bank will have the option, upon obtaining consent of the China Banking Regulatory Commission (CBRC), to redeem the US dollar tranche in full at the end of the fifth year or the euro tranche in full at the end of the seventh year. 

The Linklaters team was led by partners William Liu and Andrew Carmichael with support from managing associate Hanwen Yu. 

William Liu commented:

“BOCOM is a long-standing client of the firm and we are delighted to advise them on this landmark transaction.”

He then added:

“We have been anticipating Basel III compliant Tier 2 issuances from Chinese Banks for a while now, especially given that many of the country’s financial institutions seek to shore up cheaper forms of funding. No doubt, more will follow in the coming months.”