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China Steps up Local Government Debt Issuance for Banks

Beijing will undertake multiple measures to boost risk the strength of small and medium-sized banks, a newspaper report said, citing a CBIRC official


China's yuan has dropped to its lowest in three months on doubts about its economic slowdown.
The yuan has slipped to a three month low following data in July which showed weak demand for bank loans and a lingering impact from Covid lockdowns. Photo: Reuters.

 

China’s banking and insurance regulator, along with the central and the finance ministry, is looking to speed up the issuance of special local government bonds to bolster capital at small and medium-sized banks, a media report said.

Beijing will take multiple measures to boost the capitalisation of small and medium-sized banks and build up their resistance to risks, the state-run China Banking and Insurance News reported late on Sunday, citing an unnamed official at the China Banking and Insurance Regulatory Commission (CBIRC).

China’s economic growth slowed sharply in the second quarter, highlighting the colossal toll on activity from widespread Covid lockdowns.

In January to May, small- and medium-sized banks disposed of 394.3 billion yuan ($58.4 billion) of non-performing loans, up by 107.2 billion yuan from a year ago, China Banking and Insurance News reported.

To strengthen the capital of small and medium-sized banks, a combined quota of 103 billion yuan of special local government bond issuances was granted to the provinces of Liaoning, Gansu and Henan and the northern port city of Dalian in the first half of 2022, according to the newspaper.

In the near future, other local special bond issuance plans will be approved, and it is expected that the overall amount of 320 billion yuan will be distributed by the end of August, the newspaper added.

 

  • Reuters with additional editing by Sean O’Meara

 

 

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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