Financial China

After the credit binge, the hangover

  • Published 25 Mar 2010

China's large banks need to raise a possible Rmb 800bn to meet capital needs, but are the domestic markets up to supplying that kind of money?

First there was the credit binge of 2009. Now the banks' collective hangover is stalking China's capital markets. The need to issue shares, convertible bonds or make private placements to boost bank capital adequacy ratios (CAR) is intense, creating foreboding over the size of future liquidity calls on the A-share and H-share markets and depressing sentiment accordingly. Will China's regulators be forced to choose between adequately capitalised banks and robust share prices over the next two years or so, or can they manage a process under which both are possible?

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