SHANGHAI, Sept 26 - Shenzhen Development Bank said on Friday it had terminated a private placement to sell 4.22 billion yuan ($619 million) worth shares to Baosteel Group aimed at consolidating its capital base after its share price plunged.

The bank <000001.SZ>, nearly 18 percent owned by U.S. private equity firm Newbridge Capital [NB.UL], will instead issue a combined 28 billion yuan in various corporate bonds to help supplement capital, it said in a filing to the exchange.

"The preconditions that allow our bank to sell the stake to Baosteel have not been satisfied," it said. "After friendly consultations with Baosteel Group, we agree to terminate the placement."

Shenzhen Bank announced late last year that it would place 120 million shares to Baosteel, China's top steel maker and parent of Baoshan Iron and Steel Co <600019.SS>, at a price 35.15 yuan per share.

But a stock market <.SSEC> plunge since then have pushed the bank's share price down to only 15.31 yuan at Thursday's close.

Shenzhen Bank now planned to issue 10 billion yuan subordinated bonds, 10 billion yuan financial bonds and 8 billion yuan hybrid bonds either on domestic or overseas markets over the next three years, pending on shareholders' approval.

It also planned to auction a total of 2.676 billion worth of non-performing loans, it said in the filing.

The bank, based on China's southern booming city of Shenzhen, would raise interim returns to investors by offering three-for-10 bonus shares and a 0.0335 yuan per share pre-tax cash dividend based on its first-half earnings.

The generous offer is rare on the domestic stock market as Chinese listed firms typically do not reward investors with interim returns. Originally, the bank planned to offer two-for-10 bonus shares and a 0.023 yuan per share pre-tax cash dividend. ($1=6.82 Yuan)

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