Beijing: China plans to issue $44.25 billion in special treasury bonds to support eight state-owned financial enterprises in replenishing their core Tier One capital, the country's Finance Ministry announced on Monday. The move is aimed at strengthening the operational capacity and resilience of these institutions to risks.
According to Anadolu Agency, the Chinese Ministry of Finance intends to issue 300 billion yuan ($44.25 billion) in special treasury bonds. This initiative is designed to enhance the stability and growth of the country's economy. The ministry's circular indicated that the capital replenishment would provide stronger support for China's economic objectives.
The eight institutions benefiting from this measure include two major state-owned commercial banks, the Industrial and Commercial Bank of China (ICBC) and the Agricultural Bank of China (ABC), along with the Export-Import Bank of China and the China Export and Credit Insurance Corporation. The list is completed by four state-owned commercial insurers: the People's Insurance Company of China, China Life Insurance Company, China Taiping Insurance Group, and China Reinsurance Corporation.
The circular emphasized that the capital boost would enable these enterprises to create greater value for investors while ensuring stable long-term returns. The ministry assured that these institutions currently operate with stable asset quality and that major regulatory indicators are within safe ranges.
The announcement follows specific plans unveiled by the eight firms on Sunday. These plans involve raising or receiving a combined total of 360 billion yuan ($53.1 billion) to enhance their core Tier One capital. ABC and ICBC plan to raise up to 260 billion yuan ($38.35 billion) through A-share issuances to designated investors.
Core Tier One capital represents the highest-quality form of capital for financial institutions, serving as a crucial buffer against financial risks. A robust core Tier One capital position generally allows banks more flexibility to expand lending while maintaining regulatory capital ratios.