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China allows insurers to invest in banks' tier-2 capital bonds and perpetual bonds

[HONG KONG] China will allow insurance institutions to invest in tier-2 capital bonds and perpetual bonds issued by banks in order to boost banks' capital, the country's banking and insurance regulator said on Thursday.

The move will help commercial banks improve their capital structure, strengthen their abilities to increase lending as well as their capabilities to fend off financial risks, the regulator said in a statement on its website.

China's central bank announced earlier to set up a central bank bills swap to improve the liquidity of banks' perpetual bonds, with an aim to encourage banks to replenish capital via perpetual bond issuance.