5reels| Three banks, including Hua Xia Bank, were approved for the issuance of capital replenishment instruments, and more than ten banks had "replenished blood" during the year

Interface News reporter | an Zhen

May 20th5reelsThe website of the State Administration of Financial Supervision and Administration disclosed three administrative licenses, and Huaxia Bank, Nanhai Agricultural and Commercial Bank of Guangdong and Guangzhou Agricultural and Commercial Bank of China were approved to issue supplementary capital instruments. Among them, it is agreed that Huaxia Bank will issue 80 billion yuan of capital instruments, which are open-ended capital bonds.5reelsGuangdong Nanhai Agricultural and Commercial Bank issues capital instruments of no more than 3 billion yuan, and Guangzhou Agricultural and Commercial Bank of China issues capital instruments of no more than 12 billion yuan.

Within the approved quota, all three banks can independently determine the specific instrument variety, issuance time, batch and scale, and complete the issue within 24 months after approval.

In fact, since the beginning of this year, more than 10 banks, including Bohai Bank, Guangfa Bank, Guangzhou Bank and Guilin Bank, have obtained regulatory approval to issue capital replenishment instruments. Among them, ICBC was approved to issue 370 billion yuan of secondary capital bonds and perpetual bonds, with the largest amount; joint-stock banks, city commercial banks and agricultural commercial banks all issued less than 12 billion yuan.

Zhou Maohua, a macro researcher in the Financial Markets Department of Everbright Bank, told the interface news that the profit growth of some banks has slowed due to the complex operating environment, and that banks have also accelerated capital consumption through credit support to the real economy. By issuing capital instruments to replenish capital, enhance risk resistance, and enhance credit expansion, we can better meet the requirements of relevant regulatory indicators.

According to data from the General Administration of Financial Supervision, by the end of 2023, the capital adequacy ratio of state-owned banks, joint-stock banks, urban commercial banks and agricultural commercial banks was 17% respectively.5reels.56%, 135reels.43%, 12.63%, 12.22%.

Obviously, small and medium-sized banks are under pressure to replenish capital. Take the approved Guangzhou Agricultural and Commercial Bank as an example, by the end of 2023, the bank's capital adequacy ratio, tier one capital ratio and core tier one capital adequacy ratio were 13.67%, 11.12% and 9.83%, respectively. The prospectus shows that after the completion of the offering, the bank's tier one capital adequacy ratio will be increased by more than 1.5 percentage points.

Unlike small and medium-sized banks, after entering global systemically important banks, large banks also need to issue total loss absorptive capacity (TLAC) bonds to meet the requirement that the risk-weighted ratio of global systemically important banks should not be less than 16%.

Prior to this, ICBC and Bank of China issued TLAC bonds one after another. Judging from the issuance announcement, the terms of issuance of the bonds of the two banks are similar, with the basic issuance amount of 30 billion yuan, including 20 billion yuan in 3 + 1-year issuance and 10 billion yuan in 5 + 1-year issuance, and the right to issue no more than 10 billion yuan in excess.

The interface news reporter learned that the TLAC bonds issued by the two banks were subscribed by a number of institutions, among which ICBC TLAC bonds attracted more than 150 investors to subscribe, covering state-owned banks, joint-stock banks, urban and rural commercial banks, funds, insurance, securities firms, foreign institutions and other types of institutions, the distribution pattern of investors shows diversified characteristics.

At present, a total of five Chinese banks are facing compliance requirements. ICBC, CCB, Agricultural Bank of China and Bank of China need to meet the requirement of no less than 16% TLAC risk-weighted ratio by January 1, 2025, and Bank of Communications should meet the requirement of no less than 16% TLAC risk-weighted ratio by 2027.

Du Yang, a researcher at the Bank of China Research Institute, told the Interface News that the economic recovery will continue to consolidate the profit foundation of commercial banks, the overall logic of "premium by volume" is still established, and the replenishment of endogenous capital of commercial banks will be guaranteed to a certain extent. exogenous capital replenishment will be further consolidated under the joint influence of shareholder capital increase, issuance of sustainable bonds, targeted issuance of local government special bonds and other factors. The overall capital adequacy ratio of the banking sector will rise steadily.

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