By Cheng Leng and Sumeet Chatterjee
BEIJING/HONG KONG (Reuters) - Shares of Postal Savings Bank of China (PSBC) <601658.SS> marked a subdued Shanghai debut on Tuesday after a $4-billion share sale, underlining worries about dwindling options for lenders in the country to replenish balance sheets in a slowing economy.
The shares of the bank, which has the largest network of branches in China, were up 1.27% at 5.57 yuan by 11:10 am (0310 GMT) versus the offering price of 5.50 yuan in what was the largest mainland share sale in four years.
PSBC shares had opened at 5.6 yuan.
It is not unusual for Chinese firms to post double-digit gains and in some cases even triple the price on their first day of trade. The PSBC debut adds to the recent downbeat investor reaction to share offerings by the local banks.
Zheshang Bank Co Ltd <2016.HK> <601916.SS> rose less than 1% on its debut in Shanghai on Nov. 27 and dropped below its IPO price the following day.
PSBC said last week that investors had opted out of paying for 3% of shares on offer in the Shanghai listing in a rare development that underscored growing concerns over problems in China's banking system.
Worries about China's banking sector spiked this year after regulators in a rare move seized control of Inner Mongolia-based Baoshang Bank in May, citing serious credit risks.
Since then, regulators have resorted to a series of measures to ease liquidity stress in the banking sector, and repeatedly said risks at small financial institutions are manageable.
PSBC, which first listed in Hong Kong in 2016, is conducting the Shanghai float at the behest of the central bank which wants state-owned lenders to be more responsive to the rigours of capital markets.
It raised at least 28.45 billion yuan ($4 billion) from the first part of its 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 Hong Kong shares of PSBC <1658.HK> were up 0.2% on Tuesday in a flat broader market.
(Reporting by Cheng Leng in Beijing，Sumeet Chatterjee in Hong Kong, and Samuel Shen in Shanghai; Editing by Himani Sarkar)