SHANGHAI: China Central Huijin Investment Co, the state parent of the country's "Big Four" banks, has agreed in principle to cut the lenders' dividend payout ratio this year by 5 percentage points in order to help ease their capital strains, the 21st Century Business Herald reported on Thursday.
Huijin had already cut the ratio for Industrial and Commercial Bank of China, Bank of China and China Construction Bank by 5 percentage points in both 2010 and 2011, to the current level of 40 percent, the newspaper said.
Huijin could not be immediately reached for comment. The further 5 percentage point cut, to 35 percent, would mean the three banks would be able to retain an estimated 26.4 billion yuan ($4.19 billion) in profits to replenish capital, the newspaper said. That would leave lenders with more funds to lend, analysts said.
Chinese banks have been rushing to raise money from the capital markets in recent years due to rapid expansion and tighter capital requirements from regulators.
China's banking watchdog has repeatedly urged lenders to widen their financial channels, and to reduce reliance on equity financing.
Following the rush for share sales in 2010, many lenders have turned to debt financing, with the country's five biggest lenders, which also includes Agricultural Bank of China and Bank of Communications , raising 186 billion yuan through subordinate bond sales in 2011 alone, the newspaper said.
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