Money

State-owned banks may need to raise $23b in 5 yrs

(Agencies)
Updated: 2011-03-12 14:40

China's major state-owned banks may need to raise 150 billion yuan ($22.8 billion) of capital over the next five years to support loan expansion, which could squeeze the stock market, Reuters reported citing Chinese newspaper.

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Shanghai Securities News quoted Jesse Wang, vice-president of sovereign wealth fund China Investment Corp (CIC) as saying banks should be allowed to securitize assets to reduce pressure on capital and boost non-interest incomes from intermediary businesses so as to avoid burdening the equity market too much.

Chinese lenders, including the "Big Four" state banks, such as Industrial and Commercial Bank of China and Agricultural Bank of China raised around $80 billion last year to replenish capital depleted by a lending spree in 2009.

China kicked off a pilot program in 2005 allowing banks to securitize assets but suspended the scheme in 2008 because of the global financial crisis, the paper said.

So far, 66.8 billion yuan worth of asset-backed securities have been issued in China and there has been no case of default, according to the article.