DBS joins a long line of lenders who are bidding to bolster their balance sheets ahead of new Chinese capital ratio requirements.

DBS Bank, Southeast Asia’s largest lender, plans to inject RMB 2.3 billion ($365 million) into its China franchise to bring its captial ratio near to a high 60 per cent.

It joins a long line of lenders either based in China, or with Chinese businesses, who are bidding to bolster their balance sheets, ahead of possible fresh rules on capital ratios set by the country's watchdog.

DBS China also plans to continue investing to expand its rapidly growing franchise in the country, said the firm in a statement. The investments will be in network expansion, headcount growth, infrastructure upgrades, consumer and corporate internet banking platform enhancements and other technology developments.

DBS was the first Singapore bank to be locally incorporated in China five years ago, it said in a statement.

“Last year was a good year for the bank overall and for DBS China in particular. Our 2011 net profit doubled from a year ago, crossing the RMB 500 million mark for the first time,” said DBS China chief Melvin Teo.

“Today, Mainland China is the third largest revenue contributor to DBS Group, after Singapore and Hong Kong,” he added.

In January this year, DBS China opened its first inland China branch in Western China’s biggest city Chongqing. Chongqing is home to 33 million people and is one of the largest cities in the world. It is also China’s fastest growing city with 16.4 per cent GDP growth in 2011.

“In 2011, our net profit exceeded SGD 3 billion, a historic first for the banking sector in Singapore. Greater China accounted for around 30 per cent of our total revenues and this year, we expect this proportion to further increase,” said DBS Group chairman Peter Seah.

The move signals a commitment to the growth nation, where stricter new rules on banking could soon be enforced. 

In August last year, the China Banking Regulatory Commission issued new capital adequacy rules for banks, requiring them to maintain a capital ratio of at least 11.5 per cent, or 10.5 per cent for smaller lenders. 

Soon after, local media reports said the regulator subsequently postponed the new rules to ensure adequate lending to support economic growth. However the capital ratios are believed to be enforced soon. 

Yesterday, China Merchants Bank got the green light for a rights issue that could see it raise $5.5 billion through an A or H share placement. In March, Bank of Communications said it will raise RMB56.6 billion through a private A-share placemen, while China Mingsheng Bank raised $1.44 billion from an H-share placement. Bank of Beijing also recently raised RMB11.8 billion through a private A-share placement, according to reports.

China hasn’t announced a lending target for 2012, but Barclays reportedly estimates that Chinese banks will issue about RMB8 trillion of new loans this year.