China’s 4 state-owned banks to bring in Finance Ministry as strategic investor, a move to reinforce capital adequacy.

Four Chinese state-owned banks announced plans on Sunday to introduce the Ministry of Finance (MOF) as a strategic investor through targeted share placements, with their boards having approved proposals to issue A-shares to designated investors.

The initiative includes the Bank of China (BOC), China Construction Bank (CCB), Bank of Communications (BOCOM), and Postal Savings Bank of China (PSBC).

On Sunday, BOC announced a proposed private A-share placement to designated investors, with the MOF planning to subscribe in cash, the bank said on its official website.

The offering aims to raise up to 165 billion yuan ($22.8 billion), and after deducting related issuance expenses. All proceeds will be used to strengthen the bank’s core tier-1 capital. Core tier 1 capital serves as a fundamental driver for commercial banks to support the real economy.

The capital injection will reinforce the bank’s capital adequacy, optimize capital structure, enhance resilience and risk management capability, and enable it to better serve as a key pillar in supporting the real economy and maintaining financial stability, according to BOC.

BOCM released documents revealing plans to raise 120 billion yuan through a private A-share placement, with the MOF, China National Tobacco Corporation, and Shuangwei Investment Co as proposed subscribers.

Among them, MOF is expected to contribute 112.42 billion yuan. As with BOC, all proceeds will be used to strengthen the bank’s core tier-1 capital, according to the bank.

Source: Globaltimes