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People's Daily Online>>China Business

Lenders face increasing demand for capital

By Wang Xiaotian (China Daily)

16:48, December 28, 2011

BEIJING - Chinese commercial lenders are facing increasing pressure due to lack of capital and will continue to seek refinancing channels in 2012, said analysts.

"Although the regulators may postpone the implementation of the new capital adequacy standards, banks are still facing great pressure to replenish capital, especially given that most of their refinancing plans this year were not completed," said Guo Tianyong, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics.

China's listed lenders may raise more than 100 billion yuan ($15.78 billion) through equity financing next year to replenish their capital, because of rising pressure posed by higher capital requirements and their failure to complete financing plans through the equity market this year, the Beijing-based China Securities Journal reported on Tuesday.

The Agricultural Bank of China Ltd, Industrial Bank Co Ltd and Bank of Communications Co Ltd are facing such pressure and will probably implement refinancing plans in 2012, the newspaper cited banking professionals as saying.

"The banks' dependence on lending money to make a profit will not change in a long time. Relatively looser credit controls next year will increase capital consumption among lenders.

"Meanwhile, deposits are drifting away and equity financing is difficult to get approved," said Qiu Zhicheng, analyst at Guosen securities Co Ltd.

The China Banking Regulatory Commission (CBRC) announced earlier this year new rules setting tougher criteria for lenders' capital adequacy, which will take effect at the beginning of 2012, based on new global regulatory standards for bank capital adequacy and liquidity.

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