China’s commercial banks have issued a copious volume of perpetual bonds in 2019, since regulators gave permission for the instruments earlier that year to help lenders shore up their capital levels.
As of 30 December 2019 a total of 20 Chinese banks had obtained approval from the China Banking and Insurance Regulatory Commission (CBIRC) for the issuance of perpetual bonds, according to data form CBIRC’s website.
These banks include all five of the big state-owned lenders, as well as seven joint-stock banks, seven municipal commercial banks and one rural commercial bank:
- Industrial and Commercial Bank of China (ICBC),
- Agricultural Bank of China (ABC),
- Bank of China (BOC),
- China Construction Bank (CCB),
- Bank of Communications (BOCOM),
- China Minsheng Bank,
- Huaxia Bank,
- Shanghai Pudong Development Bank,
- China Bohai Bank,
- China Guangfa Bank,
- Ping An Bank,
- China CITIC Bank,
- Huishang Bank
- Bank of Taizhou,
- Bank of Hangzhou,
- Bank of Xiamen,
- Bank of Luzhou,
- Zhejiang Tailong Commercial Bank,
- Weihai City Commercial Bank,
- Shenzhen Rural Commercial Bank.
15 of these banks have issued perpetual bonds following approval from the Chinese central bank, worth a total of around 569.6 billion yuan. (approx. USD$81.8 billion).
Small and medium-sized banks account for 40% of approved issuers, while eight of them are municipal or rural commercial banks.
At the start of 2019 China’s central bank gave its green light to the domestic issuance of perpetual bonds by Chinese banks, with a view to helping beleaguered commercial lenders improve their capital standing.
Bank of China became the first Chinese lender to issue perpetual bonds, with the sale of 40 billion yuan of the instruments on 25 January 2019.
At the same time PBOC announced the launch of central bank bill swaps (CBS) with the goal of bolstering the liquidity of perpetual bonds, as well as the acceptance of bank perpetual bonds with ratings of no lower than “AA” as qualified collateral for medium term lending facilities (MLF), targeted medium term lending facilities (TMLF) and standard lending facilities (SLF).