China News Service, Beijing, January 25 (Reporter Wei Xi) An official announcement was made on the 25th that the Central Bank of China, in conjunction with the China Banking and Insurance Regulatory Commission, has approved Zhejiang Chouzhou Bank and Ningbo Commercial Bank to issue convertible capital bonds in the inter-bank bond market.
The Central Bank and the China Banking and Insurance Regulatory Commission have combined domestic and foreign practices to design and improve the relevant systems for convertible capital bonds. This move is to implement the requirements of the Financial Stability and Development Commission of the State Council on supporting small and medium banks to supplement capital and promote the innovative development of capital instruments.
The central bank said on the 25th that Ningbo Commercial Bank had successfully issued the first convertible capital bonds with no fixed maturity on January 20, totaling 500 million yuan, with a coupon rate of 4.80%, and a subscription multiple of 2.1 times.
Convertible capital bonds are a capital supplement tool with rights that can be converted into equity and participate in the distribution of the issuer’s remaining assets.
From the perspective of international practice, convertible capital bonds have the protective function of conversion, which is conducive to strengthening investor protection. They are generally recognized by investors and have been widely used.
The central bank stated that the next step will be to further strengthen innovation with the China Banking and Insurance Regulatory Commission, encourage and support qualified small and medium-sized banks to replenish capital through the issuance of convertible capital bonds, and enhance their ability to serve the real economy and resist risks.