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Chinese banks raise cap ad ratios

Monday 8 November 2010 – by Andrew Hickley

Commercial banks in China have improved their weighted capital adequacy ratios by an average of 0.5 per cent in the past quarter, according to the China Banking Regulatory Commission.

The CBRC said that the figure, which is measured by displaying a bank’s core capital as a percentage of its risk assets, has collectively risen to 11.6 per cent.

This represents a 0.3 percentage point increase from the start of the year, though a draft proposal from the CBRC has recommended that banks in the country should hold around 15 per cent of their capital adequacy ratios in the future.

The boost in capital ratios comes with the Chinese central bank having announced a 0.25 per cent increase in interest rates last month. Both the China Construction Bank and the Bank of China declared that they will raise around $9bn (€6.5bn) in separate dual rights issues to further boost their capital bases as a result.

The CBRC announcement also said that banks have improved their weighted core capital adequacy ratios up to 9.5 per cent, which also represents a 0.5 percentage points increase in the past quarter. This figure is up 0.4 per cent since the beginning of the year.

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