Michelle ThompsonFour of China’s largest state-owned banks announced plans on Sunday to raise a total of 520 billion yuan ($71.60 billion) through private placements, with support from investors, including the finance ministry. This follows Beijing’s commitment to strengthening banks to enhance economic support.
The capital infusion, aimed at reinforcing the banks’ core Tier-1 capital, aligns with policymakers’ recent pledge to inject 500 billion yuan into major state banks to improve their capacity to support the real economy. Bank shares rose on Monday after the announcement.
Bank of China plans to secure up to 165 billion yuan, while China Construction Bank seeks to raise 105 billion yuan. Bank of Communications intends to sell shares worth up to 120 billion yuan, and Postal Savings Bank of China aims to raise 130 billion yuan, according to Sunday’s filings.
China’s Finance Ministry, a key shareholder in all four banks, will participate in each capital raise. Following the share issue, it will become the controlling shareholder of Bank of Communications, the bank confirmed.
China’s major banks have faced stagnant profits and narrowing margins due to a slowing economy and challenges in the property sector. Analysts have urged swift recapitalization to help banks expand lending, support economic recovery, and manage asset risks.
Bank profitability, already strained by economic headwinds and prolonged real estate troubles, may come under further pressure if key interest rates are lowered this year.
China has set its 2025 economic growth target at approximately 5%, consistent with last year, as authorities allocate more fiscal resources to counter deflationary risks and mitigate the effects of US tariffs.
