China banks boosting capital as bad loans soar
They are preemptively raising funds while pricing remains favourable in order to tackle higher loan impairments
Hong Kong
CHINA'S banks, which dialled down fund-raising efforts this year even as bad debts swelled, are making up for lost time. Both lenders and the companies set up to acquire their delinquent assets are bolstering their finances. China Citic Bank Corp last month announced plans to raise as much as 40 billion yuan (S$8 billion), while Agricultural Bank of China, Industrial Bank and China Zheshang Bank are also boosting capital. China Cinda Asset Management and China Huarong Asset Management are poised to tap investors.
"Chinese banks are preemptively raising capital while pricing remains favourable in order to tackle higher loan impairments," said Nicholas Yap, a credit analyst at Mitsubishi UFJ Securities HK in Hong Kong. A rule change in April that requires lenders to make full provisions for shadow lending recorded in their receivables books is also encouraging the fund-raising, he said.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
Robinhood Crypto gets Wells notice from US SEC
Central banks need digital currencies to stay relevant
China’s CICC demotes senior bankers, cuts pay to slash costs
Citi promotes Damien Tan to corporate banking head for Singapore
Australian dollar firm as bulls bet on hawkish turn at RBA
ECB rate cut case getting stronger, says chief economist Lane