Chinese banks may need to raise 500 billion yuan (51 billion euros) in financial markets next year as the sharp rise in loans weakens their financial capacity, said Li Fuan, director at the China Banking Regulatory Commission (CBRC ).
This is the first official data on fundraising banks short term, while BNP Paribas issued a report last month in which it was stated that Chinese banks needed to raise 300 billion yuan by bonds and shares to strengthen their capital.
Li Fuan, inter alia, said at a forum held this weekend as the figure of 500 billion yuan taking into account 100 billion to 200 billion yuan for the only Agricultural Bank of China, which is preparing its initial public Exchange.
In addition, Li Fuan considers that listed financial institutions should lift more than 300 billion yuan in 2010 through either bonds or capital increases due to the explosion of loans in China.
He said the share issue is the best solution for banks to supplement their capital base.
Fuan Li also called for reform of financial markets to allow companies to raise funds more easily on stock markets and reduce dependence on bank credit to the economy.
While during the same forum Li Xiaopeng, vice-president of Industrial and Commercial Bank of China, said that lower capital ratios of commercial banks in China deserved serious attention, Bank of Nanjing, partly owned by BNP Paribas announced during the weekend it planned to raise five billion yuan by increasing equity from its shareholders.
The number of new loans to China has reached record levels in the first half of this year, despite a slowdown during the second half of the year, should remain relatively high next year to 7.500 billion yuan, according to Analysts polled by Reuters.
Last month, a source with direct knowledge of the case told Reuters that the major institutions listed Bank of China, China Construction Bank and Bank of Communications (BOCOM) had served to regulators that they worked on projects for waiver funds.