China to inject at least 400 billion yuan of fresh capital into several big banks

China plans to start re-capitalizing several of its biggest banks in coming months, according to people familiar with the matter, following through on a broad stimulus package unveiled last year to shore up the struggling economy.

Authorities are looking to inject at least 400 billion yuan (HK$428.82 billion) of fresh capital into the first batch of banks that include Agricultural Bank of China (1288) and Bank of Communications (3328), said the people, asking not to be identified discussing private information. The plan, which could be completed as soon as the end of June, is subject to change and the amount for each bank is still being finalized, said the people.

China’s banking regulator first flagged its plan to replenish core tier-1 capital at the six top state lenders in September, without elaborating. The Ministry of Finance later said that it will issue special sovereign bonds to fund the injections, which will strengthen the capability of banks to fend off risks and spur lending.

In total, China could inject as much as 1 trillion yuan of capital into its largest banks, with funding mainly from the issuance of new special sovereign debt, Bloomberg News reported last year.

The Ministry of Finance, the National Financial Regulatory Administration, Agricultural Bank and BoCom didn’t immediately respond to Bloomberg requests for comment.

Agricultural Bank rose 2.62 percent and Bank of Communications gained 2.15 percent in Hong Kong.

BLOOMBERG