China is making a big move to strengthen its financial system by injecting 500 billion yuan (about $72.5 billion) into four major state-owned banks. This massive capital boost aims to help the banks support the economy better and ensure they remain strong and stable.
On Sunday, the four banks—Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China—announced plans to raise over 520 billion yuan by issuing new shares to specific investors. The funds will be used to increase their core tier-1 capital, which is like a safety net that helps banks stay resilient during tough times.
China’s Ministry of Finance plans to participate in this fundraising by investing up to 500 billion yuan. This decision comes after the National People’s Congress, China’s top legislature, approved special government bonds to recapitalize state-owned banks.
In a statement, China Construction Bank said, “The strategic investment by the Ministry of Finance can optimize the layout of state-owned capital, enhance the efficiency of fiscal policies, and strengthen the implementation of national strategies.”
Experts believe that this move will make the banks stronger and better equipped to manage risks. With more capital, the banks can provide more support to businesses and individuals, which is crucial for economic growth and stability.
The Ministry of Finance mentioned that the banks are already operating stably, with healthy assets and strong provisions. The capital injection is expected to further enhance their ability to operate soundly, promote high-quality development, and offer long-term benefits to investors.
Last year, these four banks reported combined net profits of around 750 billion yuan, showing their significant role in China’s economy.
