More Local Govts to Sell Special Bonds to Capitalize Small Banks: News

More local Chinese governments are expected to recapitalize their regional small banks through selling the so-called special purpose bonds mandated by the Ministry of Finance, the Shanghai Securities News said. This form of recapitalization can burden regional governments with bad debt should these local banks, often with lower credit ratings, run into operational difficulties, the newspaper said. So far this year, eleven provinces have sold such bonds worth CNY112 billion, including Tianjin's CNY9.3 billion offering and CNY7.7 billion by Inner Mongolia, the newspaper said. The finance ministry in November allocated CNY200 billion quotas to be used by 18 provinces for the capitalization purpose, the newspaper said.