Lenders rush to shore up capital as bad loans mount

China's banking giants are shoring up their capital buffers at a record pace as bad loans spike to the highest level since the global financial crisis.

Lenders including Industrial & Commercial Bank of China Ltd and China Construction Bank Corp have sold an equivalent of $27.4 billion of securities that can be counted toward capital this month, data compiled by Bloomberg show. At least another $63.3 billion, which includes preference shares, is in the pipeline, according to Royal Bank of Scotland Group Plc, as banks jostle to get offerings away before the Golden Week holiday in early October.

Nonperforming loans in China touched a five-year high of 694.4 billion yuan ($113 billion) on June 30, 1.08 percent of total advances, making it more urgent for banks to build capital cushions against losses. Shares of China's five biggest banks trade at an average of five times estimated earnings, the least among lenders globally.