[09.9.11 N.Y Times]Bank of China Needs Money to Meet Capital Requirements

渔音谦谦

Bank of China Needs Money to Meet Capital Requirements            
September 11, 2009, 5:03 am

http://dealbook.blogs.nytimes.com/2009/09/11/boc-needs-money-to-meet-capital-requirements/?scp=3&   
Bank of China,the biggest foreign exchange lender in the country, said Thursday thatit would need more capital to meet its adequacy ratios, following afirst-half lending binge under Beijing’s loose money policies.
The bank’s executive vice president, Zhu Min, said the Beijing-based lender, in which Royal Bank of Scotland has a 2.69 percent stake, had no specific fund-raising plans, Reuters reported.

“It will be a commercial decision. There’s no timetable,” he told Reuters in an interview on the sidelines of a World Economic Forum meeting in the northeastern port city of Dalian.
Bank of China posted a 10 percent increase last month insecond-quarter profit as its lending soared after China instituted astimulus plan worth 4 trillion renminbi, or $585 billion.
Despite that boom and the ensuing need for more capital as Beijingnow reins in its monetary policy, Bank of China does not expect anymajor rise in its nonperforming loan ratio in the near future, Mr. Zhusaid.
He said bank officials believed that overall lending patterns forthe banking industry in China would grow in a stable pattern over thenext 6 to 12 months.
Lending “will not undergo a very dramatic drop, because still theseprojects are ongoing ones that need financing — and the crisis is notover yet,” he said.
Bank of China is expected to scale back lending in the coming monthsas Beijing moves to stem the breakneck increase in liquidity fueled byits stimulus program.
Heeding Beijing’s call to step up lending in support of the economy,Chinese banks granted a record 7.4 trillion renminbi in new loans fromJanuary through June, equivalent to about a quarter of the country’sannual gross domestic product.
Lending slowed in July and August after regulators, worried about apotential rise in bad loans and asset bubbles, leaned on banks to reinin credit growth and drafted rules to tighten capital requirements.
Major Chinese banks reported broadly flat first-half earnings, buttheir second-quarter profits jumped from a year earlier as the lendingspree outweighed compression of net interest margins. As China shiftsto tighter monetary policy with the economy on the road to recovery,banks’ interest margins are widely expected to rebound, giving them amore solid profit source.
Bank of China saw its net interest margins bottom out in July, saidMr. Zhu, the executive vice president, echoing recent comments byrivals including Industrial & Commercial Bank of China and China Construction Bank.

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