Chinese state banks raise $114b in private placements
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The news: Four of China’s largest state-owned banks will raise a combined 520 billion yuan ($114 billion) through A-share private placements to shore up the lenders' capital buffers.
The numbers: The Bank of China aims to raise up to 165 billion yuan, China Construction Bank will raise 105 billion yuan, Bank of Communications is seeking as much as 120 billion yuan, and Postal Savings Bank of China intends to raise 130 billion yuan.
The context: Reuters reports that the Chinese finance ministry (a major shareholder in all of the banks) is involved in the four deals, and follows moves by Beijing to boost capital across the country’s biggest lenders.
Earlier in March, Beijing vowed to issue 500 billion yuan in special sovereign bonds to replenish capital at the biggest state-owned banks, as the lenders face slowing profits, rising debt and record-low margins. Bloomberg reports that the sector’s net interest margin slipped to 1.52% at the end of 2024, its lowest ever.
The country set expectations for new economic stimulus measures last month when it set its 2025 economic growth goal at about 5%. In December, China’s Politburo pledged further stimulus measures in 2025, including a shift to a "moderately loose" monetary policy and a "more proactive" fiscal policy.
