Bank Of Hangzhou Co.,Ltd. recently announced that its plan to issue A-shares to specific investors, originally proposed in 2023 to raise up to 8 billion yuan, has automatically expired after two extensions. The expiration occurred because the validity period of the shareholders' resolution lapsed, and the bank did not seek a further extension. This development effectively shelves the bank's capital replenishment plan, a rare occurrence in the industry given the three-year period and two extensions.
The bank stated that its internal and external capital replenishment efforts have been robust, significantly strengthening its core Tier 1 capital. However, financial reports indicate the bank still faces capital replenishment pressures. As of the end of the first quarter of 2026, all three of Bank Of Hangzhou Co.,Ltd.'s capital adequacy ratios had declined compared to the end of the previous year.
Rights Issue Expires After Two Extensions
On July 18th, Bank Of Hangzhou Co.,Ltd. announced that the validity period of the shareholders' resolution regarding its A-share issuance plan had expired, causing the plan to automatically lapse. The plan, dating back to June 2023, initially aimed to issue up to 900 million A-shares to raise up to 12.5 billion yuan. The following day, the bank adjusted the target to raise no more than 8 billion yuan, a 36% reduction of 4.5 billion yuan. The rest of the plan remained unchanged.
The shareholders' resolution, passed on July 18, 2023, had an initial 12-month validity period. This period was extended twice, in June 2024 and June 2025. When the second extension expired on July 17th, the bank chose not to extend again, allowing the plan to lapse automatically.
In its announcement, Bank Of Hangzhou Co.,Ltd. noted that strong internal and external capital replenishment had significantly enhanced its core Tier 1 capital, providing solid support for high-quality development. The bank stated the plan's expiration would not materially impact normal operations or harm the interests of shareholders, particularly minority shareholders. The bank has been using various methods to replenish capital, including equity increases, preferred shares, and capital bonds. In 2025, it issued 20 billion yuan in perpetual bonds, redeemed 7 billion yuan, and added 13.516 billion yuan in capital through convertible bond conversions.
A tracking rating report from China Chengxin International Credit Rating Co., Ltd. acknowledged that as a listed bank, Bank Of Hangzhou Co.,Ltd. has diversified capital replenishment channels. The successful conversion of convertible bonds and strong profitability have eased capital replenishment pressure, though further progress needs monitoring.
Despite these multi-pronged efforts, financial data shows capital adequacy faces pressure. As of Q1 2026, the bank's capital adequacy ratio was 14.14%, Tier 1 capital adequacy ratio 11.62%, and core Tier 1 capital adequacy ratio 9.56%. These figures are down from 14.37%, 11.76%, and 9.59% at the end of 2025, respectively, and are all below the industry averages of 15%, 12.05%, and 10.71% for commercial banks.
Similar Cases Are Uncommon in the Industry
Rights offerings are a common equity refinancing tool for commercial banks. While over 100 banks have received regulatory approval to increase registered capital this year, the majority being rural and village banks, cases like Bank Of Hangzhou Co.,Ltd.'s plan expiring are rare. Failures typically result from shareholder withdrawals, regulatory rejection, or lapsed subscription agreements.
Analysts suggest that failed rights offerings are often due to bank stocks trading below book value, diluting shareholder equity and dampening subscription interest. The widespread adoption of debt capital tools like perpetual bonds and subordinated bonds, coupled with stronger internal profit accumulation, has reduced the urgency for equity rights offerings. Lengthy state-owned asset approval processes and individual compliance issues also hinder plans.
In the short term, a failed rights offering protects existing shareholders from dilution. However, as a crucial channel for core Tier 1 capital, it cannot be replaced by debt instruments. In the medium to long term, lacking equity capital injection may constrain a bank's credit expansion capacity.