HONG KONG (Reuters) – China is considering injecting up to 1 trillion yuan ($142.39 billion) in capital into the country's biggest state-owned banks to boost their ability to support its struggling economy, Bloomberg News reported on Wednesday.
The move is part of a wide-ranging stimulus package introduced by Beijing this week to jump-start China's sluggish economy and struggling markets.
The funds will be primarily raised through the issuance of new special bonds, Bloomberg reported, citing people familiar with the matter.
The country's banking sector regulator, the National Financial Regulatory Authority (NFRA), did not immediately respond to a Reuters request for comment.
Big financial institutions in the world's second-largest economy are struggling with shrinking margins, stagnant profits and rising bad loans amid slowing growth and an unprecedented property sector crisis.
Four of China's top five financial institutions reported lower second-quarter profits after the government prompted them to cut lending rates to stimulate weak loan demand.
The massive capital injection, which is subject to revision, would be the first time the Chinese government has stepped in to refill a major financial institution since the 2008 global financial crisis, Bloomberg reported.
China's CSI 300 blue chip index reversed early losses to rise 0.35% in the previous trading day, while Hong Kong's Hang Seng Index rose 1.5%. The yuan continued to strengthen, rising 0.12% to 7.0241 in the previous trading day on the domestic market.
(1 dollar = 7.0232 Chinese yuan)
(Reporting by Gursimran Kaur in Bengaluru, Serena Lee in Hong Kong and Lai Wee in Singapore; Editing by Kim Coghill and Sri Navaratnam)
