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Beijing Unveils 360 Billion Yuan Funding Plan in 'Clear Policy Focus' to Bolster Financial System

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Beijing Unveils 360 Billion Yuan Funding Plan in 'Clear Policy Focus' to Bolster Financial System

Major state-owned financial institutions in China announced plans to raise or receive 360 billion yuan in total, a move that analysts said should boost the country's financial system resilience.

Xinhua reported Monday that eight central financial companies are included in the plan. In separate Sunday filings, Agricultural Bank of China (HKG:1288, SHA:601288) said it is targeting up to 160 billion yuan, Industrial and Commercial Bank of China (HKG:1398, SHA:601398) will raise no more than 100 billion yuan, and People's Insurance Company or PICC (HKG:1339, SHA:601319) is looking at a maximum of 15 billion yuan.

"China's planned capital injection into several financial institutions owned by the central government underscores ongoing state support for the financial sector and a clear policy focus on strengthening financial-system resilience," Fitch said in a note.

"The Ministry of Finance-led support should help improve capital buffers, enhance loss-absorption capacity and reinforce these institutions' ability to fund policy priorities and support broader economic growth."

Others that will receive funding under the latest support package also include The Export-Import Bank of China, China Export & Credit Insurance, China Life Insurance (HKG:2628, SHA:601628), China Taiping Insurance Group, and China Reinsurance (Group), the rating agency noted.

AgBank, ICBC and PICC said the general mandates will see China's Ministry of Finance enter into separate share subscription agreements with a five-year lock-up period. New shares will be issued and listed in Shanghai.

While insurance group PICC said proceeds will be used solely for capital replenishment, the two banking majors earmarked the funds to be raised to bolster their common equity tier 1 capital. The proposed transactions remain subject to certain conditions and approvals.

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