China’s financial regulators have announced plans to give banks more means of raising capital, as the government’s crackdown on the shadow banking sector has endangered banks’ ability to maintain their required cash reserves, Caixin Global reports.
The move suggests that the government’s financial deleveraging drive is having significant effects, with banks taking responsibility for assets that they once kept off their balance sheets. The reforms are leading to some banks struggling to raise capital, according to Caixin Global.
The new proposals will allow banks to raise capital through several new instruments, including issuing capital securities with no fixed maturity and convertible bonds that allow holders to swap debt for equity for fixed terms, Caixin Global says.