Core Viewpoint - The recent trend of banks redeeming perpetual bonds and subordinated debt is driven by the need to optimize capital structure, reduce financing costs, and comply with regulatory requirements during a declining interest rate environment [1][3][4]. Group 1: Redemption Activities - Multiple banks, including China Construction Bank, CITIC Bank, and Ningbo Bank, have announced full redemptions of their 2020-issued perpetual bonds, with amounts ranging from tens of billions to hundreds of billions [1][3]. - As of September 21, 2023, the total redemption scale of bank perpetual bonds has reached 729.28 billion yuan this year, with a year-on-year increase of over 180% compared to last year's total of 1.11 trillion yuan [3][4]. Group 2: Drivers Behind Redemption - The primary drivers for the redemption of old bonds include the current macroeconomic environment of declining interest rates, allowing banks to replace high-cost debt with lower-cost alternatives [4][6]. - Regulatory requirements, particularly for globally systemically important banks, necessitate maintaining a total loss-absorbing capacity (TLAC) risk-weighted ratio of no less than 16%, prompting banks to optimize their capital structure through debt replacement [4][7]. Group 3: Capital Structure Optimization - New subordinated debt has a higher proportion counted towards capital, which can quickly enhance banks' Tier 2 capital and improve key regulatory indicators like capital adequacy ratios [6][7]. - The efficiency of old subordinated debt diminishes after five years, leading banks to redeem these bonds to maintain adequate capital buffers and comply with new regulatory standards [6][7]. Group 4: Future Outlook - As more existing capital instruments approach their redemption windows, the pace of replacing perpetual bonds is expected to accelerate, driven by stricter counter-cyclical capital regulations [7]. - If the macroeconomic interest rate trend remains downward, banks will likely continue to benefit from cost advantages in issuing new bonds, further incentivizing the redemption of old debt [7].