China’s banks to raise funds
CHINA’S largest listed 11 banks are seeking to raise tens of billions of dollars in extra capital in order to satisfy regulators.
The banks have expanded levels of lending to record levels and must now find at least Rmb300bn (£26bn) ($43bn) in new capital.
The banking regulator has warned that it will refuse approvals for expansion unless the lenders have more capital in their coffers.
It warned banks that their lending levels should be “stable and sustained” until the end of the year.
The Shanghai Composite Index fell by 3.45 per cent after yesterday’s announcement.
Following government orders to pump new funds into the domestic economy in the face of the global crisis, Chinese banks extended a record Rmb8,920bn in loans in the first 10 months of the year. That was up by Rmb5,260bn from the same period a year earlier.
That meant that the banks’ capital adequacy rates dropped from just over 10 per cent at the close of last year to 8.89 per cent at the end of September.
Bank of China has been the most aggressive lender this year, adding more than Rmb1,000bn in new loans in the first six months.