BEIJING: China will roll out a fresh round of capital injections into its largest state-owned commercial banks through the issuance of special treasury bonds, a move set to significantly boost their lending capacity and strengthen support for the real economy.
According to its finance ministry, auctions for five-year and seven-year special treasury bonds – used to inject capital into central financial institutions – are scheduled for May 22 and June 12, marking the launch of a second round of targeted capital replenishment for major state lenders.
In this round, the ministry plans to issue 300 billion yuan in special treasury bonds to bolster the banks’ core tier-one capital.
The injection is expected to enhance credit expansion and underscores a more proactive fiscal policy stance.
Last year, the ministry issued the first batch of special treasury bonds totaling 500 billion yuan to support the recapitalisation of Bank of China, China Construction Bank, Bank of Communications and Postal Savings Bank of China.
These four banks raised a combined total of 520 billion yuan, with their core tier-one capital adequacy ratios increasing by 0.86,0.48, 1.28 and 1.51 percentage points, respectively. The market generally expects Industrial and Commercial Bank of China and Agricultural Bank of China to be the main recipients of the second round of capital injections.
China International Capital Corp estimates that the 300 billion yuan injection could leverage roughly four trillion yuan in asset expansion, boosting the banks’ direct lending and capacity for acquisitions, while strongly supporting the real economy and helping prevent financial risks. The move is expected to raise the two banks’ core tier-one capital adequacy ratios by about 0.6 percentage points on average, CICC said.
According to the large state-owned commercial banks’ first-quarter reports of 2026 (1Q26), as of March 31, the core tier-one capital adequacy ratios of banks stood at 13.26% on average, meeting regulatory requirements.
Among them, ICBC and ABC saw declines of 0.63 and 0.43 percentage points from the end of 1Q25, while the rest recorded increases.
Zeng Gang, chief expert and director of the Shanghai Institution for Finance and Development, said the core objective of this round of capital injection is to enhance the long-term sustainable development capacity of large state-owned commercial banks.
The move will significantly expand their lending capacity through leverage effects and provide ample support for pro-growth policies.
Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International, said that amid adjustments in the real estate market and continued interest rate cuts by China’s central bank, net interest margins of commercial banks, especially large state-owned lenders, have narrowed rapidly since 2023.
This has weakened their ability to replenish capital through retained earnings, making external capital injections necessary to underpin stable operations.
Wang estimates that a combined capital injection of 800 billion yuan could underpin six trillion to seven trillion yuan in new lending.
This was equivalent to about 37% to 43% of China’s new yuan loans last year.
He said the move would bolster the banks’ capacity to absorb risks and strengthen the long-term resilience of itsfinancial system. — China Daily/ANN
