China banks come back for more capital as bad loans pile up

Vehicles drive on the Guomao Bridge through Beijing's central business district, June 11, 2015. REUTERS/Jason Lee

http://uk.reuters.com/article/2015/10/25/uk-china-banks-idUKKCN0SJ0YH20151025?utm_source=applenews

China banks come back for more capital as bad loans pile up
BEIJING/HONG KONG | BY MATTHEW MILLER AND UMESH DESAI

Mounting bad loans are running down Chinese banks' capital buffers, forcing them to turn to investors for fresh funds despite raising a record amount last year.

Commercial banks are issuing expensive preference shares as well as convertible and perpetual bonds to shore up their capital bases, even after 2014's bumper issuance when lenders raced to meet new regulatory requirements.

But with bad loans up 30 percent in the first half of 2015 according to China's banking regulator, doubts are growing about the ability of some banks to withstand the economic slowdown.

“China is facing a systemic credit crisis,” said Jim Antos, banking analyst at Mizuho Securities in Hong Kong.

“Chinese banks, until mid 2014, were able to cope with deterioration of loans. It seems that has changed.”