On the morning of August 7th, Bank of Shanghai issued an announcement stating that the "Bank of Shanghai Co., Ltd. 2024 first phase Tier 2 capital bond" was issued on the 6th, with an issuance amount of 20 billion yuan. Within the year, the National Financial Supervisory Authority has publicly disclosed the issuance plans for Tier 2 capital bonds or capital tools for at least 16 banks, and the scale of Tier 2 bond issuance by the six state-owned banks alone has exceeded 430 billion yuan.
Amidst the immense pressure of capital replenishment, Tier 2 capital bonds remain an essential "blood transfusion" tool for banks.
On the morning of August 7th, Bank of Shanghai issued an announcement stating that the "Bank of Shanghai Co., Ltd. 2024 first phase Tier 2 capital bond" was issued on the 6th, with an issuance amount of 20 billion yuan. According to the reporter's statistics, the National Financial Supervisory Authority has publicly disclosed the issuance plans for Tier 2 capital bonds or capital tools for at least 16 banks within the year, and the scale of Tier 2 bond issuance by the six state-owned banks alone has exceeded 430 billion yuan.
Shanghai Bank issued 20 billion tier 2 capital bonds with an interest rate of 2.15%. The issuers include GTJA Securities Co., Ltd., Bank of China Limited, China Construction Bank Co., Ltd., Postal Savings Bank of China Co., Ltd., and other well-known institutions.
Today, Bank of Shanghai announced that the "Bank of Shanghai Co., Ltd. 2024 first phase Tier 2 capital bond" is a 10-year fixed-rate product. The lead underwriters include GTJA Securities Co., Ltd., Bank of China Limited, China Construction Bank Co., Ltd., Postal Savings Bank of China Co., Ltd. and other well-known institutions. The planned issuance amount is 20 billion yuan and the actual issuance amount is 20 billion yuan. The subscription multiple is 2.94 times and the coupon rate is 2.15%. The start date is August 8th, 2024.
According to the reporter's inquiry, on August 1st of this year, Bank of Shanghai released the prospectus for the 2024 first phase Tier 2 capital bond, which stated that the bank had decided to issue tier 2 capital bonds on the interbank debt market, approved by the National Financial Supervisory Authority Shanghai Supervision Bureau's Approval of Capital Tool Issuance by Bank of Shanghai Co., Ltd." (Shanghai Financial Industry [2024] No. 357) and other approvals.
According to the information disclosed by the China Banking and Insurance Regulatory Commission's official website on June 18th, the Shanghai Financial Supervision Bureau approved on June 11th the issuance of capital instruments by Bank of Shanghai Co., Ltd. in an amount not exceeding 30 billion yuan. Within the approved amount, the bank can independently decide on the specific instrument types, issuance time, batch and scale. That is to say, after obtaining the regulatory approval, Bank of Shanghai immediately launched the issuance work for this tier 2 capital bond, which can be described as "swift".
Public information shows that the China Banking and Insurance Regulatory Commission has disclosed two approvals for Bank of Shanghai to issue Tier 2 capital bonds. Among them, in 2019, Bank of Shanghai was allowed to issue Tier 2 capital bonds not exceeding 20 billion yuan; in 2022, Bank of Shanghai was allowed to issue Tier 2 capital bonds not exceeding 20 billion yuan. In addition to the approved 30 billion capital instrument, Bank of Shanghai has been approved to issue Tier 2 capital bonds for a total of about 70 billion yuan in recent years.
The scale of Tier 2 capital bond issuance by the six state-owned banks alone has exceeded 430 billion yuan this year. According to the reporter's statistics based on the public information of various banks, as of early August, the six state-owned banks alone have issued more than 430 billion yuan in tier 2 capital bonds. Among them, Agricultural Bank of China issued over 130 billion yuan of tier 2 capital bonds, ranking first; Bank of China issued more than 120 billion yuan of tier 2 capital bonds; China Construction Bank issued a total of 100 billion yuan of Tier 2 capital bonds in two phases; Bank of Communications issued more than 56 billion yuan of Tier 2 capital bonds; and Postal Savings Bank of China issued 30 billion yuan of tier 2 capital bonds.
Reporters have noticed that many banks have successively disclosed information on the issuance of tier 2 capital bonds this year. According to the reporter's statistics based on the public information of various banks, as of early August, the six state-owned banks alone have issued more than 430 billion yuan in tier 2 capital bonds. Among them, Agricultural Bank of China issued over 130 billion yuan of tier 2 capital bonds, ranking first; Bank of China issued more than 120 billion yuan of tier 2 capital bonds; China Construction Bank issued a total of 100 billion yuan of Tier 2 capital bonds in two phases; Bank of Communications issued more than 56 billion yuan of Tier 2 capital bonds; and Postal Savings Bank of China issued 30 billion yuan of tier 2 capital bonds.
According to the official website of the China Banking and Insurance Regulatory Commission, the regulatory authority has approved and disclosed the information on the issuance of tier 2 capital bonds or capital tools for 15 banks, including Jiangsu Suzhou Rural Commercial Bank, Tianjin Rural Commercial Bank, Jiangsu Jiangnan Rural Commercial Bank, Zhejiang Zhoushan Putuo Rural Commercial Bank, Longjiang Bank, Lanzhou Bank, Ningbo Tongshang Bank, Jiangsu Yangzhou Rural Commercial Bank, Zhejiang Xiaoshan Rural Commercial Bank, CBHB, Guangfa Bank, Bank of Nanjing, Bank of Chongqing, Shanghai Pudong Development Bank, Bank of Shanghai and others, involving an amount of over 100 billion yuan.
Since the large-scale issuance of tier 2 capital bonds by banks in 2019, due to the continuous decline in market interest rates, their coupon rates have continued to decline. According to data from China Chengxin International Credit Rating Co., Ltd., the average issuance rate of tier 2 capital bonds has declined from 4.98% in 2019 to 4.32% in 2023. The coupon rates for the issuance of tier 2 capital bonds this year have all fallen to around 2%.
