China regulator issues $73bn capital requirement for banks

Chinese banks are pressured to fund their 2010 loan growth through bond or equity issuance.

Li Fuan, a director at the China Banking Regulatory Commission (CBRC), said Chinese banks are urged to procure about 500 billion yuan ($73 billion) from the capital markets next year as rapidly expanding loans weaken their financial strength.

Last month, a source said giant state-run lenders Bank of China, China Construction Bank and Bank of Communications (BoCom) have notified regulators they were working on fundraising measures to meet Beijing's tighter capital adequacy requirements.

China's new loans surged to record levels in the first half of this year and, despite an easing in the second half, are likely to remain relatively high by historical standards next year at 7.5 trillion yuan, according to a Reuters poll of 20 analysts in a report in Money Control.

The massive lending, undertaken to sustain China's economic growth, would cut banks' capital adequacy ratios, a key measure of their ability to absorb losses.