In the first two months of 2022, the bank increased its capital at a fast pace, setting off a wave of “blood replenishment tide”. Since this year, banks have issued bonds and increased capital by 218.1 billion yuan through sustainable bonds and secondary capital bonds. In addition to the conventional bond issuance channels, the allotment and fund-raising that has experienced the “empty window period” for seven years has also been used by more banks recently.
On the whole, the capital replenishment of small and medium-sized banks will still face great pressure this year. In this regard, experts suggest that more support can be given at the policy level in the replenishment of tier 1 capital such as perpetual bonds, fixed growth and preferred shares. Small banks themselves should also change their ideas, such as appropriately reducing the proportion of dividends and replenishing capital through profit retention.
capital replenishment hot
In the policy window period, the current enthusiasm for capital replenishment in the banking industry is high. Specifically, as of March 9, nine banks have issued tier 2 capital bonds since 2022, six more than the same period last year, with a total scale of 130.1 billion yuan, a year-on-year increase of more than 30 times; A total of seven banks issued perpetual bonds, four more than the same period last year, with a total scale of 88 billion yuan, a significant increase compared with the scale of 4.5 billion yuan in the same period last year.
The significant large-scale issuance of capital supplement instruments is mainly due to the large amount of bonds issued by large state-owned banks, and five of the six banks “replenish blood” by issuing bonds. The total capital of ICBC and ABC was RMB 30 billion, of which the total capital of ICBC and ABC were RMB 60.18 billion and RMB 50 billion respectively.
Zeng Gang, director of the financial development laboratory, said that the main reason for the “adequacy ratio” of the bank is to meet the requirements of the bank. On the one hand, after 2017, due to the governance of financial chaos, some off balance sheet businesses have to return to the balance sheet, which will consume part of the capital; On the other hand, in recent years, the supervision of capital adequacy ratio has become stricter, especially for China’s systemically important banks, different groups have requirements for additional capital adequacy ratio. In addition, in the process of “steady economic growth” in the future, banks also need to supplement capital in order to increase credit supply and support to the real economy.
At the policy level, since this year, the financial regulatory authorities have given policy support to the capital supplement of commercial banks in terms of channels and scope. The 2022 working meeting of the CBRC clearly mentioned “promoting small and medium-sized banking and insurance institutions to supplement capital through multiple channels in accordance with the law”. The latest “report on the implementation of China’s monetary policy in the fourth quarter of 2021” released by the central bank also said that we should improve the sustainable capital replenishment mechanism, replenish the capital of commercial banks through multiple channels, increase the support for small and medium-sized banks to issue capital replenishment tools such as sustainable bonds, and improve the ability of banks to serve the real economy and prevent and resolve financial risks.
allotment and fund raising show a warming trend
It is worth noting that allotment fund-raising has also been used by more banks recently.
Bank Of Qingdao Co.Ltd(002948) a few days ago, the shareholders who increased their shares by more than 1% after issuing the allotment. According to the announcement, Bank Of Qingdao Co.Ltd(002948) foreign shareholder Intesa Sanpaolo Bank of Italy increased its holding of 394 million H shares, with an increase ratio of 3.65%, and the shareholding ratio was changed to 17.5% after the increase; The subsidiaries of Qingdao Guoxin development (Group) Co., Ltd. increased their holdings of Bank Of Qingdao Co.Ltd(002948) 151 million A-Shares and 118 million H shares, with a total increase ratio of 1.61% and 14.99% after the increase.
For the reasons of share allotment, Bank Of Qingdao Co.Ltd(002948) once mentioned in the announcement that a certain proportion of risk buffer capital should be reserved on the basis of meeting the minimum requirements of capital adequacy ratio of regulatory authorities, so as to further enhance the ability to resist risks and deal with the uncertainty of future macroeconomic development.
Previously, the share allotment plans of Bank Of Jiangsu Co.Ltd(600919) , Bank Of Ningbo Co.Ltd(002142) and China Zheshang Bank Co.Ltd(601916) have been completed or issued successively. By means of share allotment, the original shareholders can usually increase their bank shares at a price lower than the market price. For example, Bank Of Ningbo Co.Ltd(002142) allotment price is 19.97 yuan / share, which is 50% of the closing price on the equity registration date. The preferential allotment price makes the subscription rate of Bank Of Ningbo Co.Ltd(002142) allotment as high as 99.13%.
In the future, can allotment financing become the mainstream way for banks to supplement capital China Everbright Bank Company Limited Co.Ltd(601818) financial market analyst Zhou Maohua believes that in the future, banks will still adopt differentiated and diversified ways of “blood replenishment”. Whether allotment financing will become the mainstream way of capital replenishment depends on the bank’s own situation, demand and macro market environment.
small and medium-sized bank capital replenishment deposit pressure
According to the data disclosed by the CBRC, by the end of 2021, the capital adequacy ratio at all levels had increased quarter on quarter. The core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio of commercial banks were 10.78%, 12.35% and 15.13% respectively, with a quarter on quarter increase of 11, 23 and 33 basis points respectively.
However, it is generally expected in the industry that all kinds of banks will still have great pressure on capital replenishment this year. “On the one hand, considering the list of 19 systemically important banks and the release of the framework of total loss absorption capacity, it is expected that national banks will have a stronger demand for supplementary capital. On the other hand, under the background of the further promotion of interest rate marketization and profit transfer to the real economy, the interest margin space of commercial banks has been narrowing, especially the subsequent profit retention of small and medium-sized banks The space for replenishing capital in this way has narrowed, so the demand for replenishing capital of such banks will also be relatively strong. ” Ren Tao, a distinguished researcher at the national finance and development laboratory, said.
Facing the subsequent pressure of capital replenishment, Dong ximiao, chief researcher of Zhaolian finance, suggested: first, the state needs to adjust the original capital replenishment instruments of small and medium-sized banks, innovate capital replenishment instruments and support the issuance of new capital instruments and secondary capital instruments; Secondly, small and medium-sized banks themselves should also change their ideas, such as appropriately reducing the proportion of dividends and replenishing capital through profit retention, which should be fully understood by the shareholders of small and medium-sized banks; Thirdly, we should consolidate the foundation of development, promote transformation and development, develop more capital light businesses and reduce capital consumption.
Ren Tao suggested that for national banks, the policy level can give more support in the replenishment of tier 1 capital such as perpetual bonds, fixed growth and preferred shares. For small and medium-sized banks, the policy can provide support in terms of sustainable debt and secondary capital debt. Especially for small and medium-sized banks with weak market-oriented financing ability, the role of local special bonds will be further played.
