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Ping An to Inject More Capital Into Shenzhen Development Bank

Ping An Insurance (Group) Co of China, the world's No.2 insurer by market capitalisation, plans to subscribe to another private placement by majority-owned Shenzhen Development Bank, four people with knowledge of the situation said on Wednesday.

Mark Ralston | AFP | Getty Images

The total amount pumped into Shenzhen Development Bank was likely to be about 10 billion yuan ($1.6 billion), one of the people said.

The sources declined to be identified because the information was not yet public. Ping An and Shenzhen Development Bank officials declined to comment.

"It's likely for strategic reasons that they're putting more money into the bank," said Olive Xia, a Shanghai-based analyst at Core Pacific Yamaichi. "I'm also interested in getting more details about how they are going to integrate Ping An's own banking operations with Shenzhen Development Bank's operations."

Trading in shares of Shenzhen Development Bank and Ping An was suspended pending a price sensitive announcement. Ping An owns about half of Shenzhen Development Bank and both companies are due to announce their first-half results on Wednesday.

This is the second time that Ping An has injected cash into Shenzhen Development Bank, having completed a private placement at the end of July. The move follows a regulatory ruling that could raise capital requirements to as high as 11.5 percent for systemically important banks.

Shenzhen Development Bank had a capital adequacy ratio of 10.13 percent at the end of March.

Ping An has said it wants to become a full-service financial services group to facilitate cross-selling between its insurance, banking and securities businesses modelled after the likes of Citigroup .

Ping An's Hong Kong-listed shares have fallen about 15 percent in the past month, trailing the benchmark Hang Seng Index's 6 percent decline.

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