China’s 4 top state-owned banks to raise US$72 billion from stock sales to boost capital

Four of China’s biggest state-owned banks plan to raise a combined 520 billion yuan (US$71.6 billion) from new share sales to government-backed shareholders to replenish capital, as Beijing cranks up efforts to recapitalise the 380 trillion yuan banking industry amid a slowdown in growth.

The finance ministry will subscribe to the shares of all four banks, while China Tobacco will buy Bocom’s shares, and China Mobile will acquire shares of Postal Savings Bank, with the proceeds to be used to replenish tier-one capital, according to the banks’ statements.

The shares will be denominated in yuan and trade on the Shanghai Stock Exchange after the expiry of the five-year lock-up period.

The stock offerings come after a pledge by the financial regulator to inject capital into the nation’s six major state-owned lenders at a time when the industry is grappling with many macroeconomic challenges, including a persistent decline in home prices.

The National People’s Congress, China’s top legislature, last month approved issuing 500 billion yuan of special government bonds in its government work report to help recapitalise the nation’s banks.