Case Study On Preferred Stock Financing Of Bank Of Beijing

In 2013,China formally implemented the "measures on capital management of commercial Banks" to strengthen the capital supervision of Banks,but the tier 1 capital tools of Banks are still very scarce.The securities and banking regulators have issued2014 pilot measures for the administration of the preferred stock,the commercial Banks to issue preferred stock guidance,has been clear about the preferred stock "other tier 1capital tool" positioning,for commercial Banks by preferred stock capital provides the policy basis,so many commercial Banks to issue preferred shares to supplement the tier 1capital.City commercial Banks,which are in the third tier of the banking industry,have limited capital sources and rapidly expanding scale,so it is more urgent to optimize their capital structure with preferred shares.Based on the research at home and abroad,this paper chooses the representative of urban commercial Banks--bank of Beijing as the research object for case analysis.First of all,combining with the industry background and the situation of bank of Beijing itself,this paper expounds the necessity of preferred stock financing of bank of Beijing,and analyzes the main terms of the issuance plan one by one,through the case study,it is found that the bank of Beijing is mainly affected by the industry environment and regulatory policies,and chooses to conduct preferred stock financing for the purpose of capital supplement and risk resistance.Then,based on event study method and financial index method,the financing terms are basically the same as those of large Banks,and the bank chooses more favorable terms for the issuer.After the preferred stock financing,bank of Beijing had a positive effect on the stock market,but the market reaction was very short.In the medium and long term,preferred stock effectively improves the capital adequacy ratio of bank of Beijing and optimizes the capital structure,but does not play an obvious role in improving profitability.Based on the analysis,this paper puts forward some Suggestions for commercial Banks,such as carefully evaluating the financing cost of preferred stock,flexibly setting preferred stock financing scheme,improving the efficiency of capital raising and perfecting the internal preferred stock management mechanism.In view of relevant institutions,Suggestions are put forward to alleviate theissuing pressure of issuers,improve the investor guidance and protection mechanism,strengthen the type of preferred stock and the innovation of issuing scheme.