China beefs up its biggest banks to boost the economy

Four of China’s largest state-owned banks said on Sunday they plan to raise a combined 520 billion yuan ($71.60 billion) in private placements from investors, including the finance ministry, after Beijing pledged to help them support the economy.

Four of China’s largest state-owned banks said on Sunday they plan to raise a combined 520 billion yuan ($71.60 billion) in private placements from investors, including the finance ministry, after Beijing pledged to help them support the economy. The fundraising, which aims to boost the banks’ core Tier-1 capital, comes after Chinese policymakers vowed earlier this month to recapitalize major state banks to the tune of 500 billion yuan to boost their ability to bolster the real economy. Their shares rose on Monday a day after the plans were announced. Bank of China said it aims to raise up to 165 billion yuan and China Construction Bank plans private placements of up to 105 billion yuan, filings released by the banks on Sunday said. Bank of Communications said it will sell shares of as much as 120 billion yuan, and Postal Savings Bank of China will raise up to 130 billion yuan. China’s Finance Ministry, a major shareholder of the four banks, will be involved in all four capital raises, the filings showed. The ministry is set to become the controlling shareholder for Bank of Communications following the share issue, the bank said in its filing. China’s major banks have reported flat annual profits and lower margins as a slowing economy and a struggling property sector have weighed on their earnings.