Interpac Business and Migration Solutions Melbourne Australia

(December 16, 2010)

The refinancing pace of China's banking sector will slow after 13 listed commercial banks announced their refunding plans this year, reported the Shanghai Securities News Wednesday.

The Shanghai-based newspaper said with the Industrial and Commercial Bank of China (ICBC) due to finish its issue of H shares Thursday, refinancing plans by 13 out of the 16 listed commercial banks had almost come to an end for the year.

Beijing Bank's plan to issue up to 10 billion yuan ($1.5 million) of subordinated debt was approved by banking regulators Tuesday, according to a statement by the Shanghai Stock Exchange (SSE).

Bank of China (BOC) was first in the country to start refinancing this year, followed by Bank of Communications (BOCOM), China Construction Bank (CCB), and ICBC, according to the newspaper.

It quoted official data as saying that 10 banks, including BOC, BOCOM, CCB, and ICBC, had finished their refinancing in the A share market, and three more banks' plans were underway.

To date, seven of them had raised a combined 130 billion yuan through stock allotment, while the other three had received more than 50 billion yuan through additional issues, it said.

"The refinancing was largely due to excessive bank lending since 2009 and higher capital requirements," the newspaper quoted Lian Ping, chief economist with the BOCOM, the country's fifth largest lender, as saying.

The intensive refinancing moves by commercial banks would greatly ease the funding pressures for the banking sector in 2011, said the newspaper.

But the refinancing, which aimed to increase capital adequacy ratio and core capital adequacy ratio, might only sustain two years' development for those listed commercial banks.

"I think some of them would go for refinancing again in the next two years," Lian said.

Lian said that Chinese commercial banks would have vigorous demand for capital in the coming years as mushrooming local government spending would need credit support.

Besides Agricultural Bank of China and China Everbright Bank, which issued IPOs, only the China Minsheng Banking Corporation had no refinancing plan this year, according to the SSE data.

(Source:Chinadaily)