China Will Fund State Banks and Insurance Companies with $54 Billion

China will allocate a total of $54 billion to strengthen state-owned banks and insurance companies. Part of the funds will be transferred to insurance companies. China Life will receive approximately $5.2 billion, while China Taiping will get up to $1 billion. Other state-owned insurance companies will also receive funding.

Major banks will also receive additional capital. Agricultural Bank of China will raise 160 billion yuan through a new share issuance, while Industrial and Commercial Bank of China will raise 100 billion yuan. Export-Import Bank of China will receive 30 billion yuan.

Pressure on Chinese banks has increased recently. Demand for loans is low, and low interest rates are reducing their income. Nevertheless, Beijing continues to rely heavily on state-owned banks to support the economy.

The additional capital is needed by banks and insurance companies to extend more financing and cover potential financial losses.

Source: Reuters