Bank of Hangzhou Co., Ltd – Preferred‑Stock Redemption Announcement
Bank of Hangzhou Co., Ltd (Shanghai Stock Exchange: SH600926) issued a public notice on 24 October 2025 regarding the redemption of its preferred shares. The announcement follows a series of decisions by several listed Chinese banks to redeem preferred stock, reflecting a broader trend of capital‑structure optimization within the domestic banking sector.
1. Background of the Preferred‑Stock Issue
- Issue date: 15 December 2017
- Number of shares issued: 100 million
- Issue value: 10 billion CNY
- Share class: Preferred stock, coded “杭银优1”
- Purpose: The preferred shares were raised to bolster the bank’s capital base, providing a flexible, non‑recourse financing instrument that could be redeemed at the bank’s discretion.
2. Redemption Plan Details
| Item | Information |
|---|---|
| Board approval | 27 August 2025, the board approved the redemption plan under the Preferred‑Stock Redemption Policy. |
| Regulatory clearance | The Ministry of Finance and the State Administration of Market Regulation (SAMR) Zhejiang Office confirmed no objections to the redemption. |
| Redemption date | 15 December 2025 (full‑date redemption). |
| Redemption price | Face value plus any declared but unpaid dividends up to the redemption date. |
| Cash outlay | 10 billion CNY (principal) + accrued dividends (to be calculated). |
| Impact on capital ratio | The redemption will reduce the bank’s total capital base, thereby tightening its risk‑weighted assets ratio. The bank has stated that it will manage the impact through asset‑liability management and potential capital injections. |
3. Context within the Banking Sector
The Bank of Hangzhou’s action is part of a wave of preferred‑stock redemptions by city‑level banks:
- Ningbo Bank (Ningbo Bank: “宁行优02”) announced a similar redemption for 10 billion CNY, scheduled for 7 November 2025.
- Shanghai Bank and Changsha Bank plan to redeem 20 billion CNY of preferred shares in December.
- Industrial Bank completed a 56 billion CNY redemption of its third‑phase preferred stock earlier this year.
Analysts view these moves as a balancing act between maintaining adequate capital buffers and reducing the cost of capital. By redeeming preferred shares, banks can lower dividend obligations and potentially free up funds for growth or risk‑adjusted lending.
4. Financial Snapshot of Bank of Hangzhou
| Metric | Value |
|---|---|
| Market capitalization | 119.83 billion CNY |
| Close price (22 Oct 2025) | 16.55 CNY |
| 52‑week high | 17.85 CNY |
| 52‑week low | 13.33 CNY |
| P/E ratio | 6.56 |
| Primary exchange | Shanghai Stock Exchange |
| Currency | CNY |
The bank’s stock has traded within a relatively narrow band over the past year, reflecting its steady business model centered on deposits, loans, settlement services, currency trading, credit card issuance, wealth management, and online banking.
5. Expected Market Reaction
- Share price: The redemption reduces the bank’s preferred‑share book, potentially improving its equity base. However, the immediate cash outlay may weigh on liquidity metrics, possibly putting downward pressure on the share price in the short term.
- Capital adequacy: Regulators will scrutinize the post‑redemption capital ratios. If the bank’s leverage ratios remain within the required limits, the redemption may be viewed favorably by investors focused on cost‑efficient capital structures.
- Investor sentiment: The announcement may appeal to investors who prefer banks with lower preferred‑share liabilities, but it could concern those who rely on the stable dividend profile that preferred shares often provide.
6. Regulatory Framework
Preferred‑share redemption in China requires:
- Board approval – The board must pass a resolution authorizing the redemption.
- Regulatory clearance – Approval from SAMR and the relevant local regulatory authority (e.g., Zhejiang Office for the Bank of Hangzhou).
- Disclosure – Public filing with the Shanghai Stock Exchange and the China Securities Regulatory Commission (CSRC), detailing the redemption price, date, and impact on capital ratios.
Bank of Hangzhou has complied with all regulatory steps, as evidenced by the notice issued on 24 October 2025.
7. Conclusion
Bank of Hangzhou Co., Ltd’s decision to redeem its preferred shares reflects a strategic effort to streamline its capital structure amid a broader trend of preferred‑share redemptions across China’s listed banks. The move is expected to reduce dividend obligations and potentially improve the bank’s cost of capital, though it may temporarily affect liquidity metrics. Investors should monitor the bank’s post‑redemption capital ratios and the broader regulatory environment to gauge the long‑term impact on its financial stability and share performance.
