China injects $45 bn to bail out two banks

The capital injections would precede initial public offerings for the banks, the official Shanghai Securities News added, without specifying dates or whether they would list at home or overseas. Analysts, who estimate China’s Big Four state banks have at least two trillion yuan ($240 billion) in bad debts, questioned whether the cash injection would be enough. ‘‘What is sure is that it’s not going to be enough, but still it’s a very positive sign,’’ said a senior banker with a European bank in Beijing. He said the banking system needed anything from two to four more rounds of re-capitalisation. The injection left China’s foreign exchange reserves, the second-biggest in the world behind Japan, at a massive $403.25 billion at the end of 2003, the official Xinhua news agency said.

The Bank of China has said it aims to list by 2005 and China Construction has invited investment banks to vie for a mandate to help it list, perhaps this year. The decision to bail out the banks came from the country’s cabinet, the State Council, Xinhua said.