BEIJING/HONG KONG, March 5 (Reuters) – China said on Thursday it would inject 300 billion yuan ($43.59 billion) into state-owned banks this year through a special treasury bond and deepen reforms of state-owned financial enterprises, to fend off systemic financial risks.
The measures were included in the annual government work report published by China’s top leadership at the opening session of the National People’s Congress (NPC), China’s rubber-stamp parliament.
China said it would further replenish the capital of financial institutions, and dispose of non-performing assets in the sector, according to the report.
Analysts expect Industrial and Commercial Bank of China and Agricultural Bank of China will get the capital injection after the finance ministry gave funding to four other state-owned banks last year.
The measures are part of Beijing’s effort to bolster its financial system as the world’s second-largest economy grapples with a prolonged property crisis, weak consumer confidence and deflationary pressure.
Chinese lenders have faced rising bad loans tied to struggling real estate developers and cash-strapped local governments.
The capital injection follows a similar recapitalisation plan last year of around $72 billion to boost big state banks’ core capital, a move aimed at helping lenders manage lower profit margins and asset-quality strains.
China will regulate competition among financial institutions and work to consolidate small and medium local financial institutions, according to the official report.
To attract more long-term investment into the stock market, China also wants to improve market access for medium- and long-term capital.
It will also expand exit options for private equity and venture capital funds, and plans to raise the share of direct financing and equity financing in an economy still heavily reliant on bank lending.
($1 = 6.8969 Chinese yuan renminbi)
(Reporting by Ziyi Tang in Beijing and Selena Li in Hong Kong; Editing by Christopher Cushing and Kate Mayberry)
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