Eight of China’s central financial enterprises are getting a capital top-up. The Ministry of Finance will fund it by raising 300 billion yuan (approximately US$42 Billion) through special treasury bonds.
The move follows decisions by the Communist Party’s Central Committee and the State Council.
The ministry says it will proceed under market-oriented, rule-of-law principles.
Three of the eight firms are banks. They are Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), and The Export-Import Bank of China.
The other five are insurers. They are China Export & Credit Insurance Corporation, People’s Insurance Company (Group) of China (PICC), China Life Insurance (Group) Company, China Taiping Insurance Group, and China Reinsurance (Group) Corporation.
The ministry says all eight firms are operating within normal regulatory ranges. It also describes their asset quality and key indicators as stable.
The funds will go toward core Tier 1 capital. This is the base layer of capital that firms use to absorb losses.
The ministry says the extra capital will help these firms manage risk. It should also help them keep lending to the wider economy.
The ministry links the move to its goal of high-quality growth at the eight firms. It ties this to the government’s wider push for stable economic growth.
Some of the eight firms are publicly listed. For those firms, the ministry says the capital boost should support investor value and returns over time.
Featured image edited by Fintech News Hong Kong based on an image by nataliehora on Magnific
