Chinese banks 'need to raise capital'

3 May 2011

Banks in China need to increase their capital base over the next five years, it has been claimed.

The China Banking Regulatory Commission said the institutes need to implement the action so that they will be able to lend at a pace that is fast enough to keep up with the country's economic growth, Reuters reports.

It explained, however, that fundraising efforts would not have a significant impact on stock market performance, due to the increasing scale of the domestic capital market.

"Major domestic banks have met new regulatory requirements, commercial banks' capital gap is very small and there is no need for large-scale capital replenishment," the organisation explained.

It added that there was no severe dilapidation of capital within the financial system, but noted banks' expanding loan books were taking effect.

The news comes after Bloomberg recently reported that a number of Chinese banks had posted better-than-expected first quarter earnings for this year.

By Tony Aynsley

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