Catenaa, Wednesday, February 26, 2025– China is planning to inject at least $ 55 billion to start re-capitalizing several of its biggest banks by June this year, following through on a broad stimulus package unveiled last year to shore up the struggling economy, a report by Bloomberg said on Wednesday.
Quoting sources the report said Chinese authorities are looking to inject at least $55 billion of fresh capital into the first batch of banks that include Agricultural Bank of China Ltd. and Bank of Communications Co.
Sources have said to Bloomberg, that the plan, could be completed as soon as the end of June, and the amount for each bank is still being finalized.
China’s banking regulator first flagged its plan to replenish core tier-1 capital at the six top state lenders in September, without elaborating.
The Ministry of Finance later said that it will issue special sovereign bonds to fund the injections, which will strengthen the capability of banks to fend off risks and spur lending.
Bloomberg reported last year that China could inject a total of $ 140 billion of capital into its largest banks, with funding mainly from the issuance of new special sovereign debt.
Agricultural Bank rose 2.6% and Bank of Communications gained 2.2% in Hong Kong on Wednesday.
The Bloomberg report said China is beefing up the strength of its banking system — even though the top six have capital levels that far exceed requirements — after enacting a slew of stimulus policies including broad reductions to mortgage rates and slashing key policy rates.
Enlisted to support the economy over the past few years, lenders such as Agricultural Bank and Postal Savings are now battling record-low margins, sinking profits and rising bad debt.
