Small Banks Need To Replenish Capital For Risks

China will likely push restructuring and mergers of small- and medium-sized banks and optimise policies to broaden the channels for their capital supplementation to advance their reform and risk mitigation, the Economics Daily reported on Friday. As the Third Plenum aimed to prevent the risks of small banks, the report said the issuance thresholds for capital instruments should be lowered under the premise of controllable risks, warning small banks are suffering the narrowed net interest margin weighted by high costs of attracting deposits, which has led to a decline in profitability. Moreover, there are only a few small banks that can list on the equity market, and the thresholds for issuing perpetual bonds and preferred stocks are also high, it said.