China's Ministry of Finance said on Monday that it will soon issue 300 billion yuan (about 44.25 billion U.S. dollars) in special treasury bonds to support eight state-owned financial enterprises directly administered by the central government in replenishing their core Tier 1 capital.
This move is expected to further strengthen these institutions' operational capacity, resilience to risks and ability to serve the real economy, providing stronger support for the country's steady and sound economic growth, according to a circular issued by the ministry.
The eight institutions include two major state-owned commercial banks, namely Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC); two policy financial institutions, the Export-Import Bank of China, and China Export & Credit Insurance Corporation; and four state-owned commercial insurers, which are the People's Insurance Company (Group) of China, China Life Insurance (Group) Company, China Taiping Insurance Group and China Reinsurance (Group) Corporation.
For listed enterprises of them, the capital replenishment is also expected to help create greater value for investors and deliver stable long-term returns, the circular noted.
The eight institutions are currently operating steadily, with stable asset quality and major regulatory indicators remaining within safe and healthy ranges, it said, adding that the capital replenishment endeavor will be carried out prudently in accordance with market-oriented and law-based principles.
Monday's announcement came after the eight firms on Sunday unveiled specific plans to strengthen their core Tier 1 capital, with a combined 360 billion yuan to be raised or received. Of this total, ABC and ICBC plan to raise up to 260 billion yuan through A-share issuances to designated investors.
Core Tier 1 capital is the highest-quality form of capital used to absorb losses and serves as a key buffer against financial risks. For banks, a stronger core Tier 1 capital position generally provides more room to expand lending while maintaining regulatory capital ratios.
