China’s Top Banks To Raise $71.6 Billion In Capital Boost

Four of China’s largest state-owned banks announced plans on Sunday to raise a total of 520 billion yuan ($71.6 billion) through private placements, aimed at strengthening their core Tier-1 capital. This move comes in response to Beijing’s recent commitment to help the banks support the country’s economic recovery.

The fundraising efforts were unveiled after Chinese policymakers pledged 500 billion yuan in recapitalization for the nation’s major state banks earlier this month. The goal is to enhance the banks’ financial capacity, enabling them to play a more significant role in supporting the real economy. Following the announcement, shares of the banks rose on Monday.

Among the banks, Bank of China aims to raise up to 165 billion yuan, while China Construction Bank is set to secure as much as 105 billion yuan. Bank of Communications plans to raise up to 120 billion yuan, and Postal Savings Bank of China intends to raise 130 billion yuan.

The Ministry of Finance, a major shareholder in all four institutions, will participate in each of the capital raises. According to the filings, the ministry is set to become the controlling shareholder of Bank of Communications following the share issuance.

The banks have faced pressure from a slowing economy and a struggling property sector, which have contributed to stagnant annual profits and narrowing margins. As a result, analysts have urged swift recapitalization efforts to bolster the banks’ ability to boost lending, helping to revive growth and manage the strains on asset quality.

The profitability of Chinese banks has already been under strain due to the ongoing economic slowdown and the prolonged property market crisis. Further pressure is expected, particularly with anticipated interest rate cuts this year.

With a growth target of approximately 5% for 2025, China’s government is allocating more fiscal resources to counter deflationary risks and mitigate the impact of external pressures, including tariffs from the United States.