USD$28.6 Billion in Special Bond Quotas Allocated to 18 Chinese Provinces to Bolster Regional Banks

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The Chinese central government has made copious allocations of quotas for special bond issuance to province-level authorities, in order to raise funds for shoring up the capital standing of regional lenders.

According to a report from 21st Century Business Herald Beijing has allocated 200 billion yuan (approx. USD$28.58 billion) in special bond quotas to 18 provincial governments around China for the specific purpose of “supplementing small and medium-sized bank capital.”

This translates into an average of 11.1 billion yuan per province, with recipients including:

  1. Tianjin,
  2. Hebei,
  3. Zhejiang,
  4. Shandong,
  5. Guangdong,
  6. Liaoning,
  7. Jilin,
  8. Heilongjiang,
  9. Shanxi,
  10. Jiangxi,
  11. Henan,
  12. Hubei,
  13. Inner Mongolia,
  14. Guangxi,
  15. Sichuan,
  16. Yunnan,
  17. Shaanxi,
  18. Gansu.

Liu Rong (刘荣), vice-chair of the municipal banking department of the China Banking and Insurance Regulatory Commission (CBIRC), said that province-level governments themselves would be responsible for formulating detailed plans on how the 200 billion yuan in special bond quotas would be deployed.

The health of China’s small regional lenders has been an area of heightened concern for regulators since May 2019, when Beijing forcibly took over Inner Mongolia’s ailing Baoshang Bank.

16 regional banks posted negative net profit growth for the first half of 2020, with the COVID-19 pandemic further exacerbating any of their pre-existing issues.

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