BEIJING/HONG KONG (Reuters) – Shares of Postal Savings Bank of China (PSBC) (601658.SS), which has the largest network of branches in the country, gained as much as 2.7% in its Shanghai debut on Tuesday, after raising $4 billion in the largest mainland IPO in four years.

The tepid market debut comes amid growing worries this year about the health of China’s banking sector after regulators seized control of Inner Mongolia-based Baoshang Bank in May, citing serious credit risks.  

PSBC said last week that investors had opted out of paying for 3% of shares on offer in its Shanghai listing – a rare development that underscores growing concerns over problems in China’s banking system.

Its shares debuted at 5.60 yuan and rose to a high of 5.65 yuan versus the IPO price of 5.50 yuan a share, while the benchmark Shanghai index .SSEC slipped 0.21%.      

The Chinese lender raised at least 28.45 billion yuan ($4.04 billion) from the first part of the share sale.

Total funds raised could increase to $4.7 billion if it chooses to exercise a greenshoe option of selling 15% more shares within 30 days of the start of trade.

The bank is conducting the listing at the behest of the central bank which wants state-owned lenders to be more responsive to the rigors of capital markets.

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