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China Merchants Bank to set up asset management, direct bank units

China Merchants Bank Co. Ltd. plans to set up an asset management unit with 5 billion yuan in capital.

The new subsidiary, China Merchants Bank Asset Management Co. Ltd., will allow the lender to develop its asset management business and contribute to the development of the Chinese banking sector both at home and abroad.

The move has obtained board approval and is awaiting regulatory approvals, according to a March 23 statement.

In addition, the bank's board approved a measure to set up a direct bank subsidiary alongside a strategic partner. China Merchants Bank will hold a 70% stake in the direct bank unit, while the partner will hold a 30% stake. The direct bank will have 2 billion yuan in capital.

China Merchants Bank also obtained board approval to issue up to 20 billion yuan of Tier 2 debt with a maturity period of at least five years.

Proceeds from the debt issuance will go toward redeeming 18.3 billion yuan of debt issued in 2008 and 2014, raising its capital adequacy ratio and supporting the development of the bank.

As of March 23, US$1 was equivalent to 6.31 Chinese yuan.