Bank of Jiangsu Co launched an online roadshow on Tuesday, ahead of its IPO that will make it the first regional commercial lender to get listed on the A-share market since before the global financial crisis.
The bank, based in Nanjing, capital of East China's Jiangsu Province, said on Tuesday in a filing to the Shanghai Stock Exchange that it will issue more than 1.15 billion shares at 6.27 yuan (94 cents) per share.
Online and offline subscriptions are set to start on Wednesday.
The offering is expected to raise up to 7.24 billion yuan, the biggest flotation so far this year.
The IPO signals that the door has opened again for regional banks to get listed on the Chinese mainland and similar listings will follow, experts said.
Information from the website of the China Securities Regulatory Commission (CSRC) shows that 14 regional banks are waiting in the IPO pipeline.
Eight banks such as Bank of Shanghai and Bank of Guiyang have already passed the CSRC's review. Five including Harbin Bank, Huishang Bank and Shengjing Bank have seen their materials accepted. Only the review of Bank of Chengdu was suspended for bad asset quality.
Regional banks need funds to improve their capital adequacy ratios and reach the required supplementary capital level due to rising nonperforming loan (NPL) ratios in recent years, Yu Fenghui, a senior official at the Agricultural Bank of China, told the Global Times on Tuesday.
"Raising capital through an IPO will help those banks alleviate liquidity pressure and make the situation not look too bad, but it won't solve their bad loan problems," Yu noted.
As the performances of small and medium-sized regional banks are usually closely correlated with their respective local economies, they're less experienced than large State-backed lenders in terms of risk control, pointing to a continuous rise in bad loans.
Chinese commercial banks' NPL ratio was 1.39 percent as of the end of 2015, according to data from the China Banking Regulatory Commission.
According to the prospectus of Bank of Jiangsu, the lender's NPL ratio was 1.43 percent in 2015, rising from 1.3 percent by 2014 and 1.15 percent in 2013.
Bank of Chengdu's NPL ratio stood at 2.35 percent at the end of 2015, according to media reports.
Considering that the asset quality of such regional lenders, which are heavily exposed to bad loans, isn't that good, their listings may exert a certain negative impact on the domestic stock market, Yu said.
"While the [Bank of Jiangsu] listing represents the biggest flotation this year, it isn't unlikely to bring too much pressure to the market in terms of liquidity because the securities regulator is still keeping tight control over new listings," a securities analyst who gave his family name as Sun, told the Global Times on Tuesday.
The last time the CSRC allowed city banks to go public was in 2007, when Bank of Beijing, Bank of Nanjing and Bank of Ningbo got listed in Shanghai.
A number of other regional banks such as Bank of Jinzhou, Bank of Qingdao, and Bank of Zhengzhou had to opt for listings in Hong Kong in recent years.
