Chinese investors worry that this agreement will result in large
Last week, Central Huijin Investment Co., Ltd
Last week, Central Huijin Investment Co., Ltd. hereinafter referred to as the golden at the domestic interbank market financing of RMB 540 billion. This is Huijin 1875 billion bonds of the first phase of the 1875 billion's main purpose is to raise money for three major State-owned bank, a Bank and an insurance policy. Although not meeting the official debt investors blond hair detail, but we think that most investors are banks, because China's non-bank investors
Christian Louboutin Shoes such as insurance companies and Fund still does not have wings. The use of funds from the Bank's funds, which have a negative impact of bank credit, because this would improve the banking system of the real leverage.
In order to illustrate their impact, we will assume that only the Bank purchased Huijin bonds. From an accounting standpoint, the net effect of this transaction is the bond investment banking system assets, but also increased the share capital of the corresponding amount. However, assets and share capital increase is man-made, does not have a real economic substance: Bank assets and liabilities reported in the share capital increase, the Bank can lend more, actually increase the leverage ratio of the banking system. A few big banks after the listing, less than 5 years will need to add large amounts of capital, which reflects the past few years in the banking system of rapid credit expansion. Credit spreads also encourages the bank balance sheets by expanding to grow and develop. For banks, lending is a lot of money to earn cash. But the banks balance sheets expanded too fast Wedding Shoes can cause its rapid bottleneck problems encountered capital. And Huijin by increasing the leverage to support growth, the success of this strategy is entirely dependent on the real economy is growing. If China's economic growth slowed, while the banking cannot promptly adjusted accordingly to the business model, the banks will face the challenge. Last week in Shanghai and Shenzhen stock market, and peripheral markets out of distinct market, stock index-cycle occurs more than 2 per cent decline in European and Asian stocks most copyright the index also increased, reaching an adjustment since mid-April.
A major reason, a very large extent on the Basel Agreement States investors III will affect banking investment value. Chinese investors worry that this agreement will result in large banks again faced huge capital needs complementary, causing massive for Bank stock sell-off, while foreign investors is a many-to-eight-year capital added buffer time is satisfied, and that the lifting of the banking sector the greatest uncertainties, thereby promoting the bank stocks. Basel Agreement significantly improves on III Bank core capital requirements, this is a global financial regulators from this financial crisis in the most profound lessons: only with the Bank's own capital in order to ensure that the global financial system crisis, the banking industry still have to absorb losses and to maintain sustainable asset management capabilities. According to the China Banking Regulatory Commission officials disclosed data, end of June, the domestic large, medium and small banks average Louboutin Sale capital adequacy 11.1 per cent, the core capital adequacy rate of 9 per cent, the core capital ratio of the total capital of more than 80 percent. You can see, the Bank of China industry capital adequacy, in particular to ordinary share master core capital adequacy levels much higher than overseas counterparts, in the short term, there is no obvious pressure. But the medium and long term, due to China's economic development speed, possible bad debts corresponding to the rate could be higher capital losses for the absorption of the cushion is higher, maintain overseas markets higher capital adequacy level, or will be the future regulation in order to achieve the primary goal.
According to some media reports, the CBRC consider prior to promulgation of rules including: capital adequacy level of minimum core, level of capital adequacy, total capital adequacy requirements are 6 per cent and 8 per cent, 10 per cent of the additional capital buffer requirements include 0%-4% of the remaining buffer capital and counter-cyclical buffers capital (if necessary, up to 5 per cent), meet this requirement deadline for 2012. The importance of "system" Bank may attach 1 per cent of the capital adequacy requirements. The proposed minimum loan loss provisions/total loan ratio was allegedly 2.5 loan loss provisions bad loans to 150 percent higher, the system should in 2012 the importance the Bank prior to the end of the request, the other Bank of the final implementation period to 2016. Because of this new formulation in the Basel Agreement Christian Louboutin Sale before the final version, so put the Bill still needs according to the latest revision of agreements, but it is not difficult to see, the Basel Agreement III, the CBRC established China's own standards have improved, if 2.5 per cent of the capital buffer and 0-2.5 counter-cyclical regulatory capital requirements, many banks are currently faced with a very large capital added pressure on the market concerned.
Our bank stocks since last year, is trapped in capital adequacy standards requirements, and only this year, several major State-owned banks have separately through IPO and allotment of shares, bonds, convertible bonds, and other means from the capital markets to raise funds for the Asian investors had significant short-term costs. Original investors believe that bank stocks in this round of financing with pressure-will, however, the adoption of Basel Christian Louboutin Boots means that previous recapitalization of the Banking Act, however, is the future of mass recapitalization of the first step, it is clear that investors face the uncertainty further increased.
Chinese investors worry that this agreement will result in large
By: louboutin88
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