China Greenlights Perpetual Bonds for Municipal Banks

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Chinese regulators have just given their approval to the first issuance of perpetual bonds by municipal commercial banks in the country.

Bank of Taizhou (台州银行) and Huishang Bank (徽商银行) both recently announced that they have obtained approval from regulators for their plans to issue perpetual bonds.

Bank of Taizhou plans to issue up to 5 billion yuan of the instruments, while Huishang Bank seeks to issue 10 billion yuan, according to announcements made by both municipal lenders on 7 November.

The announcements arrived just after the China’s Financial Stability and Development Commission (FSDC) stressed the need to diversify capital replenishment channels for small and medium-sized banks, after at least several regional lenders succumbed to difficulties this year.

The latest data from the China Banking and Insurance Regulatory Commission (CBIRC) indicates that as of the end of the third quarter the core tier 1 capital, tier 1 capital and capital adequacy ratios of Chinese commercial banks stood at 10.85%, 11.84% and 14.54% respectively, for across-the-board gains compared to the preceding quarter.

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