April 28, 2010 / 10:02 AM / 8 years ago

UPDATE 1-Chinese banks need to raise more capital -PBoC

* Chinese banks need to replenish capital base in 2010

* Global markets display major uncertainties (Adds more details, background)

BEIJING, April 28 (Reuters) - China’s central bank on Wednesday threw its weight behind a major fund-raising drive by the country’s banks after a record surge in lending last year.

Given the volume of capital that needs to be raised, banks will have to diversify their fund-raising channels to minimise the impact on the market, the People’s Bank of China said in a broad review of financial market performance in 2009.

Major banks are planning to raise hundreds of billions of yuan in fresh capital, a prospect that has weighed heavily on the Shanghai stock market lately. Some banks have already tapped investors. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Major banks risk breaching their minimum capital adequacy requirements after lending a record 9.6 trillion yuan in 2009 and gearing up to extend a further 7.5 trillion yuan this year as part of China’s appropriately loose monetary policy, the central bank said.

“To increase commercial banks’ capacity to absorb risk and to safeguard financial stability, banks need to replenish their capital base,” according to the PBOC report, which it published on its website, www.pbc.gov.cn.

It did not specify how banks could raise funds, but said that they should act according to regulatory guidance.

The PBOC reaffirmed that China would ensure the continuity and stability of macroeconomic policies while making them more flexible and better targeted in order to strike a balance between maintaining fast growth and managing inflationary expectations.

The central bank sounded a cautious note on the outlook of the global economy, citing policy uncertainty in leading countries.

“Major economies have different views about exiting from their stimulus policies and are adopting different timings and approaches,” the report said.

It said the United States was unlikely to unwind its pro-growth stance for the time being, although it noted policymakers had expressed their intention to make a gradual exit.

“In 2010, global macroeconomic policies will be marked by major uncertainties, which may increase turbulence in international financial markets,” the central bank added.

Under such circumstances, China’s own markets were likely to experience some volatility, it said. ($1=6.825 Yuan) (Reporting by Langi Chiang, Aileen Wang and Simon Rabinovitch; Editing by Alan Wheatley)

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