On December 19, the State Administration of Financial Supervision disclosed that three banks, including China CITIC Bank, Industrial Bank and Hengfeng Bank, applied for the issuance of capital supplementary instruments and obtained regulatory approval.
Industry insiders, from the macro, the bank chose to strengthen capital replenishment at this point in time, which will help consolidate capital strength, enhance the ability to offset risks, and expand the ability to ease creditAt the same time, the current market also has certain advantages in terms of financing costs.
A number of banks intensively "replenish blood".
Specifically, on December 19, the State Administration of Financial Supervision and Administration issued an approval to China CITIC Bank to issue capital instruments of no more than 120 billion yuan.
At the same time, the reply also requires China CITIC Bank to strictly abide by the relevant provisions of the Measures for the Management of Capital of Commercial Banks when issuing capital instrumentsWithin the approved quota, the specific tool variety, issuance time, batch and scale can be independently determined, and the issuance will be completed within 24 months after approvalIt shall be reported to the State Administration of Financial Regulation within 10 days after the completion of the issuance of capital instruments.
It is worth mentioning that just one day before the wholesale of the State Administration of Financial Regulation, China CITIC Bank announced that the issuance of secondary capital bonds in 2023 will be completed. The scale of the current period is 30 billion yuan, and the coupon rate of the 10-year bond is 319%；Whereas, the 15-year coupon rate is 325%。
On the same day, Industrial Bank was approved to issue capital instruments of no more than 130 billion yuan, and Hengfeng Bank was approved to issue capital instruments of no more than 15 billion yuan. Based on this calculation, the three banks of China CITIC Bank, Industrial Bank and Hengfeng Bank were approved to "replenish blood" with a total of 265 billion yuan.
In fact, since the beginning of this year, the issuance of large capital instruments of banks has been relatively intensive. In this round of approvals, two banks have been approved to issue capital instruments with a scale of 100 billion yuan. In November this year, China Merchants Bank was approved to issue no more than 107 billion yuan of capital instruments. Previously, the Agricultural Bank of China and the Bank of China had also been approved to issue large-scale capital instruments of 100 billion yuan.
In addition, since the fourth quarter, the State Administration of Financial Supervision and Administration has approved at least 10 banks, including China Merchants Bank, Guangdong Shunde Rural Commercial Bank, Mianyang City Commercial Bank and Huaibei Rural Commercial Bank, to raise funds through capital instruments.
Guosheng ** recently released a report saying that since the beginning of this year, the scale of the bank's second permanent bonds has expanded rapidly, and as of the end of November, the scale of secondary capital bonds has reached 358 trillion yuan, an increase of 384.3 billion yuan compared with the scale at the end of last year, and the scale of bank perpetual bonds has reached 235 trillion yuan, an increase of 267.2 billion yuan compared with the end of last year.
There is a strong demand for blood replenishment in banks
The issuance of capital instruments is an effective means of replenishing exogenous capital. Capital instruments mainly include Tier 2 capital bonds and perpetual bonds (hereinafter referred to as "Tier 2 perpetual bonds"), which can be used to supplement the bank's Tier 2 capital and other Tier 1 capital respectively to improve the bank's capital adequacy ratio.
In recent years, banks have faced many challenges in the macroeconomic environment: on the one hand, banks have to assume social responsibilities such as making profits to the real economy, reducing financing costs, and supporting small and micro enterprises, resulting in declining yields, compressed net interest margins, and slowing down profit growth;
On the other hand, banks have to cope with the rise in non-performing assets, the expansion of risk exposure, and the pressure of increased regulatory requirements, resulting in increased capital consumption, a decline in capital adequacy ratios, and increased difficulty in capital replenishment.
In this context, commercial banks urgently need to "replenish blood" through various ways to enhance their ability to resist risks and serve the real economy. Some insiders also pointed out that in addition to supplementing the demand for capital adequacy ratio, the issuance cost is also a more important influencing factor for banks to apply for the issuance of capital instruments intensively.
Hua Chuang ** pointed out in the research report that the issuance of capital instruments such as perpetual bonds and secondary capital bonds is very important for banks to replenish capital, and banks with sufficient capital can better carry out credit business, better support the development of the real economy, and also help the banking industry better resist risks.