Sep 17, 2013 06:06 PM

Preferred Shares for Banks Supported, but Direction from Gov't Lacking


(Beijing) – Despite overwhelming support for preferred shares in the banking industry, there is no consensus yet over how the financing instrument should be designed and regulated.

Many banks have been preparing to launch preferred shares, but they need regulators to clear away legal ambiguity, sources from banks said.

Preferred shares are a bond-like securities that do not give investors voting rights, as common stock does, but holders can usually expect a steady flow of returns and have prioritized claims on the issuing company's assets in the event of a liquidation. Preferred shares are traded through private placements in the primary market and are not available for public trading in the secondary market.

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