China injects capital into major banks.

VTV.vn - The Chinese Ministry of Finance has just announced a plan to issue 300 billion yuan, equivalent to nearly 44 billion USD, in bonds to inject capital into the country's largest state-owned banks.

China will continue to inject capital into large state-owned banks.

China's Ministry of Finance has just announced plans to issue 300 billion yuan, equivalent to nearly $44 billion, in bonds to inject capital into the country's largest state-owned banks, aiming to strengthen their credit capacity and bolster funding for the economy.

The auctions for 5-year and 7-year bonds are expected to take place in late May and early June. Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC) are projected to be the main recipients of this issuance. According to experts, the need for external capital is becoming more urgent, as the People's Bank of China (PBoC) lowers interest rates, narrowing bank profit margins. The new capital is expected to increase the financial system's risk absorption and recovery capacity, as well as strengthen the role of large banks as financial pillars for the economy , especially for priority sectors such as technological innovation or small businesses.

Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International, said that amid the real estate market correction and the People's Bank of China's (PBoC, the central bank) continued interest rate cuts, the net interest margins of commercial banks, especially large state-owned banks, have narrowed rapidly since 2023. This weakens their ability to replenish capital through retained earnings, making external capital injections necessary to ensure stable operations. He estimates that a total capital injection of 800 billion yuan could support 6 to 7 trillion yuan in new loans – equivalent to about 37% to 43% of China's total new yuan-denominated loans in 2025.

Wang Qing said the move would strengthen banks' risk-absorbing capacity and enhance the long-term resilience of the financial system. Increased lending capacity would also reinforce the role of large banks as financial pillars for the real economy, particularly by channeling more capital into key national strategies, technological innovation, micro and small enterprises, and other priority or underperforming sectors of the economy. According to Wang Qing, this measure also underscores closer coordination between fiscal and monetary policies, signals a more proactive fiscal stance, and lays the groundwork for further monetary easing.

Source: https://vtv.vn/trung-quoc-bo-sung-von-cho-cac-ngan-hang-lon-100260507094149325.htm