China to Inject up to 1 Trillion Yuan into State Banks to Power Growth
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China is to inject capital into the six large state-owned commercial banks via special bonds as part of a package of stimulus policies. The aim is to stabilize banking operations and enhance their lending capacity to support economic recovery.
While the scale of the capital injection remains under discussion, sources estimate it will total approximately 1 trillion yuan ($140.6 billion), resulting in 12.5 times leverage, some analysts estimate. Analysts at China International Capital Corp. Ltd. estimate that a 1-percentage-point rise in the core tier 1 capital adequacy ratio will require 1.1 trillion yuan.
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- China plans to inject capital into six major state-owned banks using special bonds to stabilize operations and enhance lending for economic recovery.
- The estimated capital injection is around 1 trillion yuan ($140.6 billion), aiming to increase lending capacity and potentially raise core capital adequacy ratios.
- This initiative is the first large-scale bank capital infusion since 1998 and will require shareholder meetings and approvals due to complexities in execution.
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