China to Inject $69 Billion Into Four Big Banks in Capital Boost

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China to Inject $69 Billion Into Four Big Banks in Capital Boost.

general :: 2025-03-30 :: source - bloomberg

By Bloomberg News

China to Inject $69 Billion Into Four Big Banks in Capital Boost. Bloomberg news

(Bloomberg) -- China’s finance ministry will inject $69 billion into four of the nation’s largest state banks via their share placements, following through on Beijing’s earlier pledge to beef up the lenders’ capital buffers.

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Bank of Communications Co., Bank of China Ltd., Postal Savings Bank of China Ltd. and China Construction Bank Corp. plan to raise up to a combined 520 billion yuan ($72 billion) through additional offerings of mainland-traded stocks, according to filings on Sunday. The Ministry of Finance will be the top investor in all the proposed private placements, subscribing to 500 billion yuan worth of shares in total.

The banks will issue the new shares at a premium between 8.8% and 21.5% above their Friday closing levels in Shanghai in order to replenish core tier-1 capital.

The announcements follow Chinese authorities’ pledge in early March to issue 500 billion yuan in special sovereign bonds to replenish capital at the nation’s biggest state-owned banks. The plan to help out the lenders was first flagged as far back as September and the government later said it would tap the notes to fund the injections.

“The move is aimed at boosting the big banks’ capability to service the real economy, allowing them to maintain relatively high asset growth, better support the emerging industries and cope with the downward pressure on margins amid rate cuts,” said Wang Jian, chief financial sector analyst at Guosen Securities Co.

China is beefing up the strength of its banking system — even though the top six lenders have capital levels that exceed requirements — after enacting a string of stimulus policies including cuts to mortgage and policy rates.

Enlisted to support the economy over the past few years, the lenders are battling record-low margins, slowing profit growth and rising bad debt. The sector’s net interest margin — a gauge of profitability — had slipped to 1.52% at end-2024, the lowest ever.

Stronger capital buffers will allow lenders to potentially provide more loans as Beijing vowed greater support for sectors from property to consumer and technology to achieve a growth target of about 5% this year. It’ll also serve China’s purpose to maintain financial stability and keep risks in check, while it contends with both domestic woes and tariff shocks from the US.

--With assistance from Twinnie Siu.

(Updates with analyst comments and more details)