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Capitial pressure still hangs over banks

By Hu Yang (chinadaily.com.cn)
Updated: 2010-12-27 16:39

China's commercial banks may still face capital pressure in 2011 or kick off a new round of refinancing within two or three years as new lending target remains high, even though some of them have just accomplished a large-scale replenishment, the China Securities Journal reported Monday.

China in 2009 issued 9.59 trillion yuan ($1.43 trillion) worth of new loans, and the number is expected to hit 7.5 trillion to 8 trillion yuan this year. Although the target for next year has not been set, it is estimated to be around 7.5 trillion yuan.

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Analysts fear the lending spree may trigger another round of capital raising, especially for small- and medium-sized commercial banks.

This year three of the nation's "big four" State-owned banks, namely Industrial and Commercial Bank of China, Bank of China and China Construction Bank, raised about 200 billion yuan ($30 billion) through A, H share rights issue and convertible bonds. Meanwhile, the Agriculture Bank of China raised $22.1 billion in its record-setting IPO.

A Shanghai Securities News report on Monday also predicts a new wave of fundraising in the next two to three years, citing the fact that tightening banking regulation may push banks to increase the capital adequacy ratio and provision coverage ratio.