China plans to inject up to $47 billion into state banks and insurers
China plans to strengthen the capital of state-owned banks and insurance companies through injections and private placements of shares totaling up to 317 billion yuan, equivalent to approximately $47 billion. This was reported by Asharq Al-Awsat, citing company statements and Reuters.
Capital for insurers
China’s Ministry of Finance will contribute 57 billion yuan, or about $8 billion, to the capital of three state-owned insurance groups. The largest life insurer, China Life Insurance Group, will receive 35 billion yuan, while China Taiping Insurance Group will receive 7 billion yuan.
People’s Insurance Company Group of China plans to raise up to 15 billion yuan through a private placement of Class A shares to the Ministry of Finance. The company is expected to use the proceeds to replenish its capital.
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China Life said the injection should strengthen the financial sector’s capacity to support the real economy and promote the development of the financial and insurance industries. The company also said it would bolster its ability to withstand risks. China Taiping said the funds should improve solvency indicators and other key metrics.
Plans of two state-owned banks
Separately, Agricultural Bank of China and Industrial and Commercial Bank of China announced plans to raise 160 billion yuan and 100 billion yuan, respectively, through private placements of Class A shares. The buyers of the shares are expected to include China’s Ministry of Finance, China National Tobacco Corp, and its subsidiaries.
Both banks said they would use all of the funds raised to replenish core Tier 1 capital. This should help support the expansion of lending, as Beijing relies on state-owned banks to support economic growth.
