Key banks eye 520b yuan via placements

Sector challenged by limited profit growth, narrow net interest margins

China's major State-owned commercial banks plan to raise up to 520 billion yuan ($71.7 billion) via private placements from investors, including the finance ministry, a forward-looking move which analysts said will help forestall financial risks and better support the real economy.

The fundraising aims to replenish core tier-1 capital — the core capital held in a bank's reserves — to help ensure that the financial system has the necessary resilience and lending capacity to support the economy's transition toward innovation and consumption-led growth, they said.

Bank of Communications, Bank of China, Postal Savings Bank of China and China Construction Bank announced plans on Sunday to raise a combined 520 billion yuan through additional offerings through the Shanghai Stock Exchange.