Capital replenishment is very important for the long-term development of banks. The bank’s core capital supplement methods mainly include IPO, convertible bonds, fixed increase, allotment, etc. other supplement channels of tier 1 capital include perpetual bonds and preferred shares, while the supplement channels of tier 2 capital include tier 2 capital bonds, etc.
Looking back on the banking industry in 2021, bond issuance has become an important channel for bank capital supplement: commercial banks issued nearly 2 trillion bonds in 2021, including 615.423 billion yuan of secondary capital bonds and 585.5 billion yuan of perpetual bonds respectively.
From the perspective of IPO, four banks achieved A-share IPO during the year. Among them, Bank Of Chongqing Co.Ltd(601963) (601963. SH) returns from H shares to a shares, and Qilu Bank Co.Ltd(601665) (601665. SH), Zhejiang Shaoxing Ruifeng Rural Commercial Bank Co.Ltd(601528) (601528. SH), Shanghai Rural Commercial Bank Co.Ltd(601825) (601825. SH) starts to land on a shares.
In addition, allotment and fund-raising are frequent in the Jianghu. Last year, three listed banks completed allotment and fund-raising; The special bonds of small and medium-sized banks were also disclosed successively in 2021, exceeding the expected 200 billion yuan, and the actual issuance was 210 billion yuan; Private placement has also become one of the main channels for banks to supplement capital, and many banks have tied up certain non-performing assets at the same time.
tier 2 capital bonds become the main types of bonds issued by commercial banks
Tier 2 capital bonds and perpetual bonds are the main types of bonds issued by commercial banks in 2021. In 2021, commercial banks issued 1934.378 billion yuan of bonds. Tier 2 capital bonds and perpetual bonds ranked the top two, with an issuance scale of 615.423 billion yuan and 585.5 billion yuan respectively. Specifically, in the first half of 2021, the issuance scale of perpetual bonds was higher than that of tier 2 capital bonds; In the second half of the year, the issuance scale of tier 2 capital bonds was higher than that of perpetual bonds.
Secondary capital, also known as subsidiary capital or supplementary capital, is other capital components in the capital base of commercial banks excluding core capital. It is an indicator reflecting the capital adequacy of banks. Perpetual bonds refer to bonds without a clear maturity date or with a very long term, that is, they exist permanently in theory and are used to supplement other tier 1 capital of banks.
As for the favor of tier 2 capital bonds by commercial banks last year, China Everbright Bank Company Limited Co.Ltd(601818) Zhou Maohua, a macro researcher of the financial market department, said in an interview with surging news that the issuance of tier 2 capital bonds by commercial banks last year was mainly due to the approaching transition period of the “new asset management Regulations” and the return of some assets; Driven by the expansion of credit demand of the real economy; Influenced by the regulatory requirements for additional capital of systemically important banks and other factors, banks have a strong enthusiasm to supplement capital. In addition, secondary capital bonds have no restrictions on whether banks are listed or not, which helps to broaden the channels for small and medium-sized banks to supplement capital that have not yet been listed.
With regard to the capital replenishment of commercial banks, the 2021 Bank Of China Limited(601988) industry development report released by the China Banking Association pointed out that with the support of regulatory policies, perpetual bonds have become the preferred tool for other tier 1 capital replenishment of commercial banks, and the issuance scale of tier 2 capital instrument bonds has also continued to remain high.
allotment financing is frequent in the Jianghu
The capital allotment of the first bank is 94s0026 {s0026} in the city last year, and the capital allotment of the first bank is 94s0026 {s0028} in the city of s6016}, which is worthy of replenishment. Share allotment refers to the financing behavior that the original shareholders place a certain number of newly issued shares at a specific price lower than the market price according to their shareholding ratio.
The last round of A-share bank allotment fund-raising also dates back to the rmb27.5 billion allotment financing implemented by China Merchants Bank Co.Ltd(600036) (600036. SH) in 2013.
China Merchants Securities Co.Ltd(600999) Liao Zhiming, chief banking analyst, said in an interview with surging news that the frequent allotment of shares is related to the generally low valuation of banks in the past two years.
“In these banks, Bank Of Ningbo Co.Ltd(002142) The valuation of is relatively high, with relative exceptions. The valuation of most A-share listed banks is relatively low. Banks supplement core tier 1 capital mainly through fixed increase, allotment of shares and convertible bonds. There is a requirement that the fixed increase is not lower than the latest audited net assets per share, which makes the participating institutions of fixed increase need to buy bank shares at a premium. Compared with fixed increase, the allotment can break through the limit of double Pb (price to book ratio), and all shareholders of the bank can participate in the allotment. It may take a long time for convertible bonds to supplement capital. ” Liao Zhiming said.
In addition, Liao Zhiming believes that there is a great pressure to supplement the core Tier-1 capital of banks, especially the implementation of the policy of additional capital of China’s systemically important banks. “Additional capital needs core Tier-1 capital to meet, so some banks with high pressure on core Tier-1 capital will choose the way of allotment to supplement.” Liao Zhiming said.
special bonds of small and medium-sized banks have been issued
Under the epidemic, the capital supplement methods of small and medium-sized banks are also constantly innovating. The special bonds of small and medium-sized banks used to support the resolution of local risks will be issued in 2021.
On January 25, the official website of the CBRC showed that the CBRC held a 2022 working meeting on January 24 to summarize the banking and insurance supervision in 2021 and deploy the key tasks in 2022. The meeting pointed out that the CBRC, together with the financial department, has approved a total of 210 billion yuan of local government special bonds to supplement the capital of small and medium-sized banks.
From the perspective of provinces, the special bonds supporting small and medium-sized banks involve 20 provinces: Shanxi, Heilongjiang, Guangxi, Sichuan, Guangdong, Liaoning, Inner Mongolia, Jiangxi, Zhejiang, Fujian, Tianjin, Shaanxi, Gansu, Hebei, Shandong, Jilin, Henan, Hubei, Yunnan and Anhui.
From the perspective of capital injection methods, there are indirect shareholding, share conversion agreement deposit, phased shareholding, strategic deposit agreement and so on. Among them, the deposit of share conversion agreement is an innovative capital tool to supplement the capital of small and medium-sized banks. It injects the local government bond funds that can be used to supplement the capital of small and medium-sized banks into the target bank in the form of deposit to supplement the capital of the target bank. At the same time, the deposit of share conversion agreement is stored in the long-term agreement with the target bank, which stipulates that it will be converted into common shares when the conditions for share conversion are met, Or the target bank shall repay the principal and interest after the deposit in the share conversion agreement is due or redeemable.
With regard to the special debt of small and medium-sized banks, Zhongtai Securities Co.Ltd(600918) Dai Zhifeng, chief analyst of banking industry, believes that injecting small and medium-sized banks with special debt of local government will make local governments become shareholders, make local government debt explicit, and make the rights and responsibilities of local governments to banks clearer. This model matches the corporate governance structure of small and medium-sized banks.
Zeng Gang, deputy director of the national finance and development laboratory, pointed out in an interview with surging news that most small and medium-sized banks can realize capital supplement and sustainable development through market-oriented mechanism and their own accumulation, but some banks can not form effective supplement through market-oriented mechanism. This actually increases the channels of capital replenishment and is a supplement to the market-oriented capital replenishment mechanism mentioned earlier.
normalization of bad fixed increase tying
Private placement is also a main way for banks to supplement capital.
Surging news observed that in 2021, small and medium-sized banks gradually normalized the tying sale of certain non-performing assets while replenishing capital through fixed increase.
With regard to the fixed increase tying of non-performing assets by banks, Zhou Maohua believes that some banks use the fixed increase tying of non-performing assets to reflect that some small and medium-sized banks supplement capital, have high pressure on non-performing disposal, few channels and high pressure on supervision to meet the standards. He hopes to supplement capital through the fixed increase tying of non-performing assets and dispose of non-performing assets as soon as possible, To meet the regulatory requirements such as capital adequacy ratio and non-performing rate. In the short term, this method helps some banks to quickly replenish capital and dispose of non-performing assets, but the risk of non-performing assets is still accumulated in the financial system; However, in the medium and long term, the fundamental strategy needs to speed up the improvement of internal governance, improve risk and operation ability, and enhance their hematopoietic ability.
Dong ximiao, chief researcher of Zhaolian finance, also said in an interview with surging news that banks will increase the option of subscribing for non-performing assets, which has widened the channels and methods for the disposal of non-performing assets of small and medium-sized banks. On the one hand, commercial banks should take various measures to speed up the disposal of stock non-performing assets; On the other hand, we should adhere to standards, strictly control and strictly control the generation of new non-performing assets. The regulatory authorities should continue to take targeted measures to support commercial banks, especially small and medium-sized banks, in multi-channel and efficient disposal of non-performing assets. In the process of serving the real economy and transferring profits to real enterprises, governments at all levels should adhere to the principles of marketization and legalization, maintain a good financial ecological environment and protect the legitimate rights and interests of commercial banks.
