China is to inject capital into the six large state-owned commercial banks via special bonds as part of a package of stimulus policies. The aim is to stabilize banking operations and enhance their lending capacity to support economic recovery.
While the scale of the capital injection remains under discussion, sources estimate it will total approximately 1 trillion yuan ($140.6 billion), resulting in 12.5 times leverage, some analysts estimate. Analysts at China International Capital Corp. Ltd. estimate that a 1-percentage-point rise in the core tier 1 capital adequacy ratio will require 1.1 trillion yuan.
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