China’s bank capital conundrum

A recent Basel announcement means China’s banks must raise billions in capital in the coming years. It should be manageable but support from foreign investors is far from assured.

China’s biggest banks have a lot of funding to do.

On November 11, the Basel Committees Financial Stability Board FSB updated its guidance on capital requirements for the world’s 30 systemically important banks. The announcement targeted China’s biggest lenders Industrial Commercial Bank of China, Bank of China, the Agricultural Bank of China and China Construction Bank which was only added to the list a week before the FSB’s announcement.

The amended rules require the four banks to put aside the same levels of capital as their Western peers. That means they need to raise $600 billion in total loss-absorbing capital TLAC by 2025,...

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