Earlier this year, Chinese banking regulators tightened capital rules and made it harder for banks to borrow short-term funds, which further whetted China Merchants Bank's appetite for funding.

The bank has failed to meet the 8.5 percent core capital adequacy ratio requirement for three consecutive years ending 2012. The bank managed to raise the level to 8.6 percent at the end of March this year, but it dipped again to 8 percent at the end of June.

The capital adequacy ratio is a ratio of a bank's capital to its risk. It's also widely used by regulators worldwide to contain risks in the banking system.

Analysts expect the rights issuance to raise the ratio to around 10 percent, which will give the lender more room to extend loans.

Chinese regulators require the price of rights issuances to be not lower than a company's net asset value per share. China Merchants Bank's net asset per share stands at 9.29 yuan (HK$11.77). Its shares traded at HK$14.48 yuan at the close of trading on Friday in Hong Kong.

That means China Merchants Bank cannot offer big discounts on the rights issue, which might hit investor enthusiasm.

China Merchants Bank will kick off the mainland banks' earnings season.

Its net interest income rose 8.7 percent year-on-year to 47.44 billion yuan in the first half of the year, while net fee and commission income soared 46 percent to 14.16 billion yuan year-on-year.

Its net interest margin, a primary measure of a bank's profitability from lending, dropped to 2.72 percent from 2.96 percent at the end of June 2012, as a result of rising interest costs.

China Merchants Bank also reported a 0.71 percent non-performing loan ratio as of June 30, up from 0.61 percent at the end of 2012.