Alibaba-backed online lender MYbankbecame the first private lender to win approval to replenish capital through the sale of perpetual bonds as regulators take more steps to ease smaller banks’ thirst for capital, reported Caixin.
Officially known as Zhejiang E-Commerce Bank, MYbank won approval to sell as much as RMB 5 billion ($70 million) of perpetual bonds to supplement its core Tier 1 capital, according to a statement published by the China Banking and Insurance Regulatory Commission.
Perpetual bonds are a type of debt with no fixed repayment date. Issuers can either pay interest indefinitely or until they choose to pay back the debt. Accounting regulations allow perpetual bonds to be treated as equity rather than liabilities on balance sheets.
Zhejiang-based MYbank joins a series of Chinese lenders issuing perpetual bonds after regulators stepped up support for banks to recapitalize through bond sales since last year amid the economic slowdown. It was the first privately funded bank to win such approval.