China’s Major Banks to Raise 520 Billion Yuan in Private Placements

China’s Major Banks to Raise 520 Billion Yuan in Private Placements

Large-Scale Fundraising to Support the Economy

Four of China’s largest state-owned banks announced plans to raise a combined 520 billion yuan ($71.60 billion) through private placements. This move follows Beijing’s commitment to strengthening the banking sector to enhance economic support.

Strengthening Core Capital

The fundraising aims to boost the banks’ core tier-1 capital. Earlier this month, Chinese policymakers pledged to recapitalize major state banks with 500 billion yuan to bolster their ability to support the real economy China’s Major Banks to Raise 520 Billion Yuan in Private Placements

Large-Scale Fundraising to Support the Economy

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Breakdown of Fundraising Plans

• Bank of China aims to raise up to 165 billion yuan.
• China Construction Bank plans private placements of up to 105 billion yuan.
• Bank of Communications intends to issue shares worth as much as 120 billion yuan.
• Postal Savings Bank of China will raise up to 130 billion yuan.

Role of the Finance Ministry

China’s finance ministry, a major shareholder in these banks, will participate in all four capital-raising efforts. Following the share issuance, the ministry is set to become the controlling shareholder of Bank of Communications.

Challenges Facing Chinese Banks

China’s major banks have reported stagnant annual profits and declining margins. A slowing economy and a struggling property sector have negatively impacted their earnings. Analysts have urged policymakers to act swiftly in recapitalizing these banks to ensure their ability to extend credit and manage asset quality risks.

Economic Outlook and Policy Measures

With profitability already under pressure, banks may face further financial strain if key interest rates are cut this year. China has maintained its economic growth target at around 5%, with the government pledging additional fiscal resources to counter deflationary risks and mitigate the effects of U.S. tariffs.

“China’s Major Banks to Raise 520 Billion Yuan in Private Placements”