Xin Lang Cai Jing·2025-06-18 16:06Core Viewpoint - Recent approvals for perpetual bonds by banks in Northwest China, specifically Lanzhou Bank and Xi'an Bank, indicate a strategic move to enhance capital adequacy ratios amid tightening capital conditions [5][6][8]. Group 1: Bond Issuance Approvals - Lanzhou Bank has received regulatory approval to issue up to 5 billion RMB in perpetual bonds, with the flexibility to decide on timing, batches, and scale within 24 months [1]. - Xi'an Bank has also been approved to issue up to 7 billion RMB in perpetual bonds, similarly allowing for autonomous decisions regarding issuance timing and scale within the next 24 months [3]. Group 2: Purpose of Bond Issuance - The issuance of perpetual bonds is primarily aimed at improving capital adequacy ratios, as banks are currently facing tighter capital conditions [5]. - Both banks have disclosed their plans for the use of raised funds, with Lanzhou Bank intending to enhance its ability to support local businesses and promote stable business development [8]. - Xi'an Bank plans to use the funds to meet macro-prudential capital adequacy requirements and support its ongoing business growth [8]. Group 3: Market Trends and Context - The issuance of "perpetual bonds" has accelerated since the second quarter, with total issuance surpassing the previous year's figures [5][9]. - As of now, the cumulative issuance of "perpetual bonds" by domestic commercial banks has reached approximately 770.16 billion RMB, with 596.3 billion RMB issued in the second quarter alone [9]. - The decline in bond market interest rates has contributed to the increased pace of issuance, with current costs remaining at historical lows [9].