Jingu Finance News | Haitong Int'l indicated that on October 12, 2024, at the State Council Information Office press conference, it was mentioned that "issuing special national bonds to support large state-owned commercial banks in supplementing core Tier 1 capital, enhancing the risk resistance and credit extension capabilities of these banks, and better serving the development of the real economy".

The bank pointed out the need for precaution in a conservative scenario. As of Q2 2024, the top six banks' core Tier 1 capital adequacy ratios from high to low are: China Construction Bank at 14.01%, Industrial and Commercial Bank at 13.84%, Bank of China at 12.03%, Agricultural Bank of China at 11.13%, Bank of Communications at 10.30%, and Postal Savings Bank of China at 9.28%. The bank believes that the current core Tier 1 capital adequacy ratios of Industrial and Commercial Bank and China Construction Bank are sufficient to support potential scale growth, and the supplement of core Tier 1 capital this time is more of precaution in a conservative scenario. Assuming the future 3-year profit growth of the top six banks is 0, and the weighted risk asset growth rate is 15%, if the current core Tier 1 capital adequacy ratio is 12.3%, the core Tier 1 capital adequacy ratio after 3 years will be about 8%. For global systemic banks, this is to maintain the upper limit of core Tier 1 capital adequacy ratio at 80% for profit retention rate, and the lower limit at 60% for profit retention rate.

For existing shareholders, there is short-term dilution effect. On the other hand, if capitalized at 1 times PB, it also reflects shareholders' recognition of its value.