Beijing launches $72bn capital injections at biggest banks

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Four of the largest banks in China will feel 520 billion yuan ($ 72 billion) through stock sales for investors, including the Ministry of Finance, as Beijing seeks to strengthen its vast banking sector against urgent economic problems.

The Bank of China, the Bank of Communications, the Chinese Postal Bank and the China Building Bank, said they will collect 165 billion yuan, 120 billion yuan, RMB130 billion yuan and RMB105 billion yuan, respectively, in the stock exchange files on Sunday.

The Ministry of Finance will be a major capital investor by the four banks, all of which are owned by the state and have about 10 yuan in the capital last June.

The rare injection of the government will increase the basic capital of banks-a measure of shares used by the organizers to reduce the financial leverage-a part of a series of official support measures that aim to restore confidence in the second largest economy in the world.

China is struggling with the threat of shrinkage, weak consumer spending and now slowing property in its fourth year, and recently adapting political makers a more urgent tone where they are trying to restore confidence.

The country’s largest bank pressure and the increase in capital, which was previously marked by the authorities, faced part of a batch to enhance lending amid constant weakness through the economically decisive property sector.

The net net margin of the Bank of China – a scale of profitability – fell to 1.4 percent last year, from 1.59 percent, while at the Telecom Bank was slightly narrowed to 1.27 percent.

The authorities set the goal of GDP growth of 5 percent for the year 2025 at a meeting of the highest policy makers this month, as they also pledged to issue 500 billion yuan in special bonds to finance capital injection in the banking sector.

Chinese exports are subject to a new tariff from the Trump administration in the United States, which was initially an additional 10 percent in February before this month was doubled to 20 percent. Last year, exports were a growth engine as home prices decreased on consumption.

“The injection will enhance the availability of funds to support the country’s growth amid the opposite winds of the tariff,” said analysts at the S& PLOBAL this month. They added that “Megabanks plays an important role in supporting the social and economic initiatives of the government by lending to the upgraded policies.”

Political makers initially indicated a redrawing of the largest banks in China in September last year when Beijing revealed discounts in mortgage rates and the re -purchase of the stock market. The stock market later recovered after years of declines, as the CSI 300 scale of Shanghai-Shenzhen stocks increased by more than 10 percent last year.

But the real estate sector is still burdened with confidence, with the price of new homes decreased in February and the investment in development by 10 percent last year. Chinese real estate developers have about 12 ransles in obligations in total, according to estimates in 2023 from the National Office for Statistics.