China Considers Injecting $142 Billion into Major Banks, Reports Bloomberg News via Reuters

HONG KONG (Reuters) – China is contemplating a capital injection of up to 1 trillion yuan (approximately $142.39 billion) into its largest state-owned banks to enhance their ability to support the ailing economy, according to a report on Wednesday.

This initiative is part of a series of stimulus measures announced by Beijing this week aimed at revitalizing China’s struggling economy and sluggish markets.

The funding is expected to primarily come from the issuance of new special sovereign bonds, as reported by individuals familiar with the situation.

The National Financial Regulatory Administration (NFRA), which oversees the banking sector, did not provide an immediate response to a request for comment.

China’s major lenders have been facing challenges including declining profit margins, reduced earnings, and increasing bad loans, all exacerbated by slowing economic growth and a significant crisis in the property sector.

During the second quarter, four out of China’s five largest banks reported lower profits after following government guidance to reduce lending rates to stimulate weak loan demand.

If implemented, this substantial capital injection—subject to modifications—would mark the first intervention by the Chinese government to bolster its major banks since the global financial crisis in 2008.

In market reactions, China’s CSI300 blue-chip index turned around from earlier losses to trade 0.35% higher, while Hong Kong’s market saw a 1.5% gain. The yuan also strengthened, trading up 0.12% at 7.0241 in the onshore market.