Jin Rong Shi Bao·2025-05-29 03:19Core Viewpoint - The recent approval for the issuance of A-shares by four major state-owned banks in China aims to raise a total of 520 billion RMB to strengthen their core tier one capital and support future business development [1][4]. Group 1: Specifics of the Share Issuance - The specific objects of the share issuance include the Ministry of Finance, with variations among the banks; for instance, China Bank and Construction Bank are solely issuing to the Ministry, while others include additional entities like China Mobile and China Tobacco [2]. - The distribution of the 520 billion RMB raised is as follows: China Bank up to 165 billion RMB, Construction Bank up to 105 billion RMB, Transportation Bank up to 120 billion RMB, and Postal Savings Bank 130 billion RMB [3]. Group 2: Use of Raised Funds - The funds raised from the issuance will be used entirely to increase core tier one capital after deducting related issuance costs, which will enhance the capital adequacy ratios of the banks [4]. Group 3: Source of Funding - The Ministry of Finance plans to issue special government bonds worth 500 billion RMB to support the capital replenishment of these banks, as part of a proactive strategy rather than a response to financial distress [5][6]. Group 4: Rationale for Premium Issuance - The issuance is conducted at a premium to the market price, reflecting confidence in the banks' future development and the stability of the Chinese economy, while also addressing concerns about asset quality and profitability [8]. Group 5: Protection of Minority Shareholders - The banks acknowledge that the issuance may temporarily dilute earnings per share and net asset value, but they commit to enhancing capital management and profitability to protect the rights of minority shareholders [9].