Chinese banks may need $131bn in equity over six years

Chinese banks may have to raise about 860 billion yuan ($131 billion) of stock over six years to meet stricter capital rules, Bloomberg News reported on Thursday.

The banks will probably also need 1.26 trillion yuan ($193 billion) in additional capital by the end of 2016, according to estimates from China's banking regulator, Bloomberg cited a person familiar with the issue as saying.

The estimates were compiled in January and assume economic growth of 8 percent a year and 15% credit expansion, Bloomberg quoted the source as saying.

A spokesman from China Banking Regulatory Commission (CBRC) told Reuters the commission had not provided any specific goals to each of the banks but the banks are studying their individual conditions and will take a decision in due course.

The government said late last year that it was shifting to a tighter monetary policy in an effort to rein in China's rapid credit growth that has helped propel consumer inflation to its fastest rise in more than two years.

Rising prices are a source of growing public discontent and have become a hot political concern.

According to current CBRC rules, top lenders such as Industrial & Commercial Bank of China, China Construction Bank, Bank of China and Agricultural Bank of China are required to meet a minimum capital ratio of 11.5%, while small-and mid-sized banks must meet a minimum ratio of 10%.

The core capital adequacy ratio with Chinese banks rose an average 0.9 percentage point to 10.1% at the end of last year, the CBRC said in February.

The government has also raised the required reserve ratio (RRR) for Chinese banks six times since October, with the latest increase last month bringing the RRR to a record 20 percent for the country's biggest banks.

These moves are obliging Chinese banks to find ways to increase their capital to meet the government's tighter requirements.