fbpx

Type to search

China’s ICBC to Sell $4bn of Total-Loss-Absorbing-Capacity Bonds

ICBC to issue $4.15 billion worth of TLAC bonds on Wednesday amid demands to support highly indebted developers and Local Government Financing Vehicles


An ICBC banner is seen at the 2020 China International Fair for Trade in Services – CIFTIS – in Beijing (Reuters).

 

One of China’s big state lenders has said it will issue 30 billion yuan ($4.15 billion) worth of total loss-absorbing capacity (TLAC) bonds on Wednesday May 15.

The issuance of such bonds by Industrial and Commercial Bank of China will be the first by a Chinese bank.

The country’s big banks face growing pressure to raise capital, as demands mount to support the economy and highly indebted property developers and local government financing vehicles.

 

ALSO SEE: ANZ Bank Facing Probe over Issuance of Treasury Bonds

 

ICBC, which is the world’s largest bank by assets, said it would issue 20 billion yuan in a tranche of four-year bonds it can redeem at the end of three years, and 10 billion yuan in six-year bonds with conditional redemption at the end of five years.

The details were covered in a bond prospectus released on the website of the Shanghai Clearing House on Saturday.

The proceeds are to be used to improve the bank’s total loss absorbing capacity, it said, with the issue period to run from Wednesday to Friday.

The TLAC bonds, which are not counted in a bank’s capital base, can be written off, or converted into common equities, when the bank enters the disposal phase.

Designated as global systemically important banks, five of the nation’s biggest state banks, including ICBC, are stepping up efforts to meet stricter global regulatory rules on capital buffers.

To plug a capital shortfall, the five lenders have unveiled plans this year to issue a total of 440 billion yuan of TLAC bonds. Still, they will have a TLAC shortfall of 1.6 trillion yuan by January 2025, Fitch Ratings estimates.

 

  • Reuters with additional editing by Jim Pollard

 

ALSO SEE:

Top China Bank to Pay $32m Penalties For US Regulatory Lapses

US Insurer Sues China’s Third Biggest Bank Over ‘Massive Fraud’

Chinese Loans to Russia Quadruple Since Ukraine War – FT

China Banks Approve $17bn For Housing as Policy Debate Rages

China’s Financial Watchdogs Vow to Maintain Strict Supervision

Beijing Throws Lifelines to ‘Whitelisted’ Property Developments

China Moves to Lift Property Sector Amid Evergrande Crash Fears

China to Probe Troubled Shadow Bank Steeped In $64 Billion Debt

China Hits 12 Regions, Cities With New Debt Growth Curbs

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.