Beijing
Reuters
–
On Sunday, four of China’s largest public banks said they planned to raise 520 billion yuan ($ 71.60 billion) of private investor investments, including the Ministry of Finance, after Beijing is committed to helping them support the economy.
The collection of funds, which aims to stimulate the basic capital of banks, comes after Chinese decision-makers promised earlier this month to recapitalize large state banks up to 500 billion yuan in order to strengthen their capacity to strengthen the real economy. Their actions increased on Monday after the announcement of the plans.
Bank of China said it was aimed at increasing up to 165 billion Yuan and China Construction Bank Private Plans of Plansing up to 105 billion yuan, documents published by banks said on Sunday.
The communications bank said that it would sell shares of 120 billion yuan, and the postal savings bank in China will increase up to 130 billion yuan.
The Chinese finance ministry, a large shareholder in the four banks, will be involved in the four capital increases, according to deposits. The ministry should become the control shareholder of the communications bank following the program issue, said the bank in its file.
The main Chinese banks have declared stable annual profits and lower margins as a slowing economy and a real estate sector in difficulty weighed on their income.
Analysts have urged Chinese officials to quickly capitalize on the country’s major banks to help them stimulate loans to revive faulty growth and manage asset quality strains.
The profitability of Chinese banks, which has already been under pressure due to the economic slowdown and a prolonged crisis in the real estate market, should still be pressed by potential reductions in key interest rates this year.
China has set its objective of economic growth for this year at around 5%, unchanged compared to last year, while the government has promised more budgetary resources to extend the deflationary pressures and compensate for the impact of American tariffs.
