Major Banks to Replenish Capital

A rundown of the news making headlines in and around China:

Banks replenish capital: Four of China’s “Big Six” state-owned commercial banks have announced plans to issue shares through private placements, primarily to the Ministry of Finance. China Construction Bank Corp., Bank of China Ltd., Bank of Communications Co. Ltd., and Postal Savings Bank of China Co. Ltd. intend to raise a total of up to 520 billion yuan ($71.5 billion), which will supplement their core capital. All four are issuing shares above market prices but below book value, which may push stock prices down, but adding capital can enable them to expand lending and generate more profits, investment bankers said. External financing has become an effective way to ease pressure on banks amid slower profit growth. The move also reflects the country’s expansionary fiscal policy, rather than being purely market-driven.