Central Huijin Investment Co. (Huijin), an investment arm of the Chinese government, signed a contract with the China Development Bank (CDB) onday to inject 20 billion U.S. dollars into the state-owned policy bank.
The investment, ratified by the State Council, would sharply raise the CDB's capital adequacy and improve its risk-prevention capability, said a press release by the People's Bank of China, the nation's central bank.
The release indicated CDB was undergoing a fundamental reform to become a fully commercial financial institution.
Huijin had formerly invested in major Chinese commercial banks, including ICBC, CCB and the Ever Bright Bank, to help them shake off the heavy burden of bad loans before being restructured into a joint-stock company.
On Dec. 25, Lou Jiwei, chairman of the China Investment Corp. (CIC), the country's state forex investment company, indicated at a public occasion that it controlled Huijin and was confident in the CDB's reform and restructuring.
CIC had formerly promised to invest a third of its 200 billion U.S. dollars capital, or about 60 billion U.S. dollars, in the CDB and the Agricultural Bank of China.
CDB is one of the country's three policy banks, the other two being the Eximbank and the Agricultural Development Bank. CDB's public financial data revealed it was in far better financial condition than most of the country's commercial banks.