The mainland's central bank extended a reserve requirement cut to some national lenders including China Merchants Bank and Industrial Bank as the government tries to support growth without unleashing a broader stimulus.
The People's Bank of China approved a 0.5 percentage-point cut for Industrial Bank and Minsheng Bank also gained a reduction, spokesmen said. China Merchants Bank confirmed a 0.5 percentage-point cut in a stock exchange statement.
While the PBOC yesterday said it had not widened the scope of a reserve ratio cut announced on June 9 to help support small businesses and agriculture, national lenders were not mentioned in that statement.
"Some banks have approached the central bank, and after adjustment of the 'tiny and small' business definitions, both Minsheng Bank and Industrial Bank are qualified for a required reserve-ratio cut," China International Capital banking analysts Huang Jie, Mao Junhua and Zhu Jie said in a report distributed earlier in the day. They added that China Merchants had also been included.
Industrial Bank, Minsheng Bank and Merchants Bank had about seven trillion yuan (HK$8.8 trillion) of combined deposits by the end of last year, according to their annual reports. That suggests a 0.5 percentage-point cut for all three would free up about 35 billion yuan. Bank of Ningbo, a city commercial bank that also confirmed it had received a reserve-ratio reduction, had deposits of 255.3 billion yuan.
On June 9, the central bank said the cut, effective from yesterday, applied to about two-thirds of city commercial banks, 80 per cent of non-county level rural commercial banks and 90 per cent of non-county level rural co-operative banks. The criteria for the reduction included banks' levels of lending to "small and tiny businesses".
The PBOC yesterday said the cut applied to all banks, including state commercial banks, joint-stock banks, city commercial banks and rural commercial banks, that met the requirements.
Minsheng Bank's share price gained 3.1 per cent in Shanghai and Merchants Bank increased 1.7 per cent. Industrial Bank gained 1.6 per cent and Bank of Ningbo rose 0.5 per cent.