Embattled Bank of Jinzhou plans to suspend dividend payments on its offshore preference shares, becoming the first Chinese lender to do so as concerns grow over the country’s banking system.
The bank pinned the blame for the decision on its capital adequacy ratios, which no longer meet regulatory standards, according to a stock exchange filing late on Sunday. The bank was seeking shareholder approval to cancel dividends on the preference shares for the 12-month period ending October 26 2019, the filing added.
A number of Chinese banks have in recent years raised money selling preference shares, which promise a fixed payment to investors and take priority over ordinary equity. Hong Kong-listed Bank of Jinzhou is one of three mid-tier Chinese lenders that have required state-engineered support in recent months as the economy has slowed and levels of bad debt have surged.