ප්‍රධාන වාණිජ බැංකු 6කට ප්‍රාග්ධනය

China plans to inject capital into six major commercial banks: official

China will inject capital into six major banks to consolidate and enhance their ability for steady operation and development, said director of the National Financial Regulatory Administration Li Yunze said at a press conference in Beijing on Tuesday (Sep. 24).

The unusual move comes as China's largest commercial banks struggle with low margins and declining profits.

"After studying the situation, the state plans to increase the tier-1 capital of six major commercial banks. The capital will be injected in an orderly manner, with coordinated planning, phased implementation and tailored policies. The administration will continue to prompt the major commercial banks to enhance management and strengthen their ability to achieve high-quality development under capital constraints," Li told reporters.

Tier-1 capital refers to the core capital held in a bank's reserves, including common stock and disclosed reserves.

Authorities are also working on expanding the scope of equity investment trials, according to Li.

Asset investment and management departments at major commercial banks have carried out equity investment pilot programs in Shanghai, and conditions are in place to expand the programs, Li said, adding that the administration will study how to expand the programs to 18 large and medium-sized cities with active scientific and technological innovation, including Beijing. At the same time, measures will be taken to relax restrictions and optimize assessment.

"We will relax the restrictions on the amount and proportion of equity investment to an appropriate extent, increase the proportion of on-balance-sheet investment from the original 4 percent limit to 10 percent, and increase the proportion limit of investment in a single private fund from the original 20 percent to 30 percent. Efforts will also be made to guide relevant institutions to implement the due diligence and responsibility exemption requirements, and to establish and improve long-cycle and differentiated performance appraisals," said Li.

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