The recent lending surge by Chinese banks in response to
monetary stimulus designed to support China’s slowing economy is also adding to
the banks’ capital needs, by accelerating the expansion of their balance
sheets, said the Financial
Times.
Listed Chinese banks will need to raise about $260 billion in fresh capital
over the next three years as regulations force shadow-bank loans back on to
balance sheets and global rules on systemically important groups impose extra
requirements on the largest lenders.
“The
constraint on bank lending from capital adequacy requirements is making
financing difficult and expensive for the real economy. So there’s an urgent
need for banks to replenish capital,” said Bo Dikuo, president of Shanghai
Chunda Asset Management.
Listed banks will need to raise RMB 1.74 trillion in regulatory capital over
the next three years, excluding the amount they are expected to generate
internally through retained earnings, according to an estimate by Central China
Securities.