Arabic version: الصين تخطط لضخ 360 مليار يوان في رؤوس أموال القطاع المالي
According to Cnbc, three state lenders and five insurers will receive a combined 360 billion yuan ($53.6 billion) from state institutions led by the Ministry of Finance and China’s tobacco giant. Beijing is using the capital injection as credit demand remains weak and lenders face multiyear pressure on margins.
The package marks the first time Beijing has extended recapitalisation to insurers. Their solvency ratios have weakened as persistently low interest rates squeeze profitability. The insurance sector’s solvency ratio stood at 180.6% at the end of the second quarter, down from 204.5% last year, while remaining above the 100% regulatory requirement.
Agricultural Bank of China plans to raise up to 160 billion yuan and Industrial and Commercial Bank of China up to 100 billion yuan through private A-share placements. The Export-Import Bank of China will receive a direct 30 billion yuan injection from the finance ministry. China Life is set to receive 35 billion yuan, China Taiping Insurance 7 billion yuan, and People’s Insurance plans to raise up to 15 billion yuan. Sinosure will receive 10 billion yuan, while China Reinsurance Group will raise 3 billion yuan.
The recapitalisation was smaller than markets had anticipated, according to Citibank. Hong Kong-listed shares of the named banks and insurers fell Monday, with Agricultural Bank of China down 2.7%, ICBC down 2.3%, China Taiping Insurance losing almost 4%, and People’s Insurance and China Life each falling more than 2%. The move follows a 500 billion yuan injection into four major state banks last year and a March pledge to issue 300 billion yuan in special treasury bonds this year for large state lenders.
Economists said additional capital could strengthen banks’ lending capacity, help them dispose of non-performing loans and support strategic investment. However, Larry Hu of Macquarie said the immediate economic effect was likely to be limited because weak credit demand, rather than insufficient bank capital, remains the main constraint on lending.
