Big six state-owned lender the Postal Savings Bank of China (PSBC) has just grabbed approval from Chinese regulators for a bumper issuance of perpetual bonds to shore up its capital standing.
PSBC announced on 4 March that it had obtained approval from authorities to issue 80 billion yuan (approx. USD$11.45 billion) in perpetual bonds – instruments that were first launched in China in early 2019 to help lenders beef up their capital levels.
Seven banks in China have grabbed approval for perpetual bond issues since the start of 2020, all of which have been small and medium-sized banks with the exception of PSBC.
The six smaller banks are on track to issue a total of 38 billion yuan in perpetual bonds.
CIB Research analyst Guo Yixin (郭益忻) said that the issuance of perpetual bonds by China’s commercial banks on 2020 is on track to exceed issuance in 2019, and could exceed 600 billion yuan.
2019 saw 16 issuances of perpetual bonds by 15 Chinese banks, raising 569.6 billion yuan in total.
Five of China’s big state-owned banks issued 320 billion yuan in perpetual bonds collectively in 2019, accounting for well over half of total issuance.
Agricultural Bank of China was the biggest issuer of perpetual bonds in 2019, with two separate issues of 85 billion yuan and 35 billion yuan.