FSDC Greenlights Issuance of Perpetual Bonds by Banks to Shore up Capital


China’s Financial Stability and Development Committee (FSDC) has given the green light to the issuance of perpetual bonds by the country’s banks in order to help them to replenish their capital levels.

The FSDC said in an official statement that it hopes banks can begin selling perpetual bonds “as soon as possible,” after convening a meeting to discuss the matter on Tuesday.

The perpetual bonds will have no date of maturation, and provide Chinese banks with a low cost channel for accessing funds.

Chinese banks have found it increasingly difficult to meet capital adequacy requirements after Beijing’s shadow banking crackdown and deleveraging campaign compelled them to shift many of their shadow lending activities back onto balance sheets.