Shanghai Pudong Development Bank aims to raise HK$10 billion (US$1.28 billion) in an initial public offer in Hong Kong, the South China Morning Post on Tuesday quoted market sources as saying.

The Chinese lender, which is about 4.2 percent-held by Citigroup, plans to sell about 700 million A-shares for 9.5 billion yuan (US$1.21 billion) before working on a H-share offer, the newspaper said, adding that Citigroup would raise its stake in the bank to about 19.9 percent after the share sale.

Proceeds raised would be used to build capital base and to fund expansion, the newspaper added. The bank's A-shares have risen more than 39 percent so far this year to end at 13.58 yuan on Monday.

Shanghai Pudong Development Bank, which raised 2.6 billion yuan in July from the sale of 10-year subordinated bonds, sees its earnings rising 25 percent this year and loans growing 18 percent, the newspaper said. It gave no further listing details.