The Industrial and Commercial Bank of China Ltd. (ICBC), China’s largest lender, issued USD5.65 billion equivalent in aggregate of Basel III-compliant Additional Tier 1 preference shares. Allen & Overy advised ICBC International as Sole Global Coordinator and ICBC International, Goldman Sachs, UBS and Bank of America Merrill Lynch as joint lead managers and joint bookrunners on ICBC’s debut offshore AT1 preference share offering.

ICBC issued AT1 preferences shares in three tranches – USD2.94 billion 6.00% US dollar-denominated preference shares, EUR600 million (USD745 million) 6.00% euro-denominated preference shares and RMB12 billion (USD1.96 billion) 6.00% RMB-denominated preference shares. This landmark issue is the first Asian AT1 offering in three currencies, the first in euros from an Asian bank and the first Asian AT1 offering in 144A/Reg S format. The RMB tranche is also the first offshore RMB denominated AT1 offering and the largest non-sovereign RMB denominated securities offering in history.

Established in 1984, ICBC currently ranks first in the PRC banking industry in terms of each of total assets, market share of loans and market share of deposits. Among the Global 2000 selected by Forbes based on a combination of parametres including sales, profit, assets and market value as at 31 December 2013, ICBC was ranked as the largest enterprise in the world. Within the Global 500 selected by Fortune based on total operating revenue for the year ended 31 December 2013, ICBC was ranked first among all commercial banks. In the Top 1000 World Banks selected by The Banker in terms of tier 1 capital as at 31 December 2013, ICBC was ranked first with tier 1 capital of USD207.6 billion.

Commenting, Allen & Overy Hong Kong-based partner John Lee said: “We are delighted and honoured to have been involved in this landmark transaction which is the first time a Chinese bank has issued Additional Tier-1 regulatory capital securities in three different currencies and under Rule 144A/Regulation S. Each preference share has a par value of RMB100 but its liquidation preference and dividends are denominated in the relevant currencies, which is a novel feature. Issuing in multiple tranches in different currencies, as well as under Rule 144A and Regulation S, was a strategic decision by ICBC based on the recommendations of the underwriters to maximise the potential investor pool and achieve better pricing. And the success of the transaction is not only a testament to the strength of ICBC but it has helped in further promoting a new asset class to international investors.
We have been involved in a number of market firsts with respect to bank regulatory capital securities in China and elsewhere in Asia and are delighted to have been involved in another innovative and landmark transaction by the world’s largest bank, ICBC.”

Partners John Lee and Alex Stathopoulos led the Allen & Overy team with support from counsels Abigail Boyd and Giancarlo Sambalido, and associates Ke Huang, Marcus Eldridge and Wen Gao.