China’s finance ministry is injecting $69 billion into four state banks to bolster their capital buffers, following a pledge made earlier this year. The Ministry of Finance will invest in Bank of Communications Co., Bank of China Ltd., Postal Savings Bank of China Ltd., and China Construction Bank Corp., with the majority of its $50 billion investment expected to be subscribed for shares worth 500 billion yuan.
The banks plan to raise up to $72 billion through additional stock offerings, which will be used to replenish core tier-1 capital. The new shares will be sold at a premium between 8.8% and 21.5% above Friday’s closing levels in Shanghai.
China is strengthening its banking system amid record-low margins, slowing profit growth, and rising bad debt. The move aims to boost the lenders’ capability to service the real economy, maintain relatively high asset growth, and support emerging industries. Stronger capital buffers will enable lenders to provide more loans, supporting Beijing’s growth target of 5% this year.
The injections also aim to maintain financial stability and keep risks in check as China navigates domestic challenges and tariff shocks from the US. The plan comes after Chinese authorities pledged $20 billion in special sovereign bonds to replenish capital at state-owned banks in early March.
Source: https://finance.yahoo.com/news/china-state-banks-plan-placements-084203009.html