Bank of China plans US$21 billion bond sales to comply with global capital requirements
- The bank will be the nation’s first big state bank to plug a major funding shortfall before a 2025 deadline to meet global capital requirements
- The lender said it plans to tap both domestic and overseas debt markets to sell a new category of total loss-absorbing capacity (TLAC) bonds
Bank of China said it plans to sell up to 150 billion yuan (US$21 billion) of loss-absorbing bonds, becoming the nation’s first big state bank to plug a major funding shortfall before a 2025 deadline to meet global capital requirements.
The lender said it plans to tap both domestic and overseas debt markets to sell a new category of total loss-absorbing capacity (TLAC) bonds, according to a Friday filing with the Shanghai Stock Exchange.
China’s banking regulator in 2022 allowed the nation’s major state-owned banks to issue the bonds, in a move it said would help prevent any potential instability in its financial system.
The loss-absorbing bonds, which are not counted in a bank’s capital base, can be written off, or converted into common equities, when the bank enters the disposal phase.
China’s top five lenders – Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and Bank of Communications – are designated as global systemically important banks by Chinese regulators and the Switzerland-based Financial Stability Board (FSB).
