BEIJING (Reuters) – The Industrial and Commercial Bank of China said it will issue 30 billion yuan ($4.15 billion) of Total Loss Absorbing Capacity (TLAC) bonds on May 15, marking the first issuance of such bonds by is a Chinese bank.
China’s largest state-owned lenders are facing increasing pressure to raise capital, especially as demand increases to support the economy, property developers and local government financing instruments.
The world’s largest bank by assets said it would issue 20 billion yuan in a tranche of four-year bonds that it can redeem at the end of three years, and 10 billion yuan in six-year bonds with conditional redemption at the end of five year.
The details are in a bond prospectus published on the Shanghai Clearing House website on Saturday.
The proceeds will be used to improve the bank’s overall loss-absorbing capacity, the report said, with the issuance period running from Wednesday to Friday.
The TLAC bonds, which are not counted in a bank’s capital base, can be written down or converted into common stock when the bank enters the divestiture phase.
Five of the country’s largest state-owned banks, including ICBC, have been designated as global systemically important banks and are stepping up efforts to comply with stricter global regulations on capital buffers.
To fill a capital shortfall, the five lenders this year unveiled plans to issue a total of 440 billion yuan in TLAC bonds. Still, they will have a TLAC deficit of 1.6 trillion yuan by January 2025, Fitch Ratings estimates.
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($1=7.2261 renminbi)
