China’s top state banks to raise $71.6 bn in capital boost backed by Beijing – Firstpost

Four of China’s biggest state-owned banks announced plans Sunday to raise a combined 520 billion yuan ($71.6 billion) in private placements, including from the finance ministry, as Beijing moves to shore up support for the country’s slowing economy.

The recapitalisation effort, aimed at strengthening the banks’ core tier-1 capital, follows a pledge from Chinese policymakers earlier this month to inject 500 billion yuan into major lenders to enhance their capacity to support the real economy.

Bank of China said it intends to raise up to 165 billion yuan, while China Construction Bank plans to raise up to 105 billion yuan. Bank of Communications aims to raise as much as 120 billion yuan, and Postal Savings Bank of China will seek up to 130 billion yuan, according to regulatory filings released Sunday (March 30).

The finance ministry, a key shareholder in all four banks, will participate in each of the planned share sales. Bank of Communications said the ministry will become its controlling shareholder following the capital raise.

The fundraising comes as China’s large banks grapple with flat annual profits and declining margins, weighed down by a cooling economy and ongoing struggles in the property sector.

Analysts have called on authorities to recapitalise the banks quickly to boost lending, revive growth, and address mounting pressures on asset quality.

Profitability for Chinese lenders has already been under strain amid weak economic momentum and a prolonged property downturn. Prospects for further interest rate cuts this year could add to the squeeze on margins.

China has set an economic growth target of around 5 per cent for 2025, the same as last year, while promising more fiscal support to counter deflationary risks and soften the blow from ongoing US trade tariffs.

With inputs from Reuters