ICBC, BoCom, CCB Issue 160 Billion Yuan in Subordinated Bonds; ICBC and BOC Complete 50 Billion Yuan in

Since July, Industrial and Commercial Bank of China (ICBC), Bank of Communications (BoCom) and China Construction Bank (CCB) have successively issued new tranches of tier-2 capital bonds, with a total size of 160 billion yuan. In addition, ICBC and Bank of China (BOC) jointly completed the issuance of 50 billion yuan in perpetual bonds this month.

CCB announced on 27 July that it had recently issued the second tranche of 2026 tier-2 capital bonds on the national interbank bond market, with a size of 60 billion yuan and a coupon rate of 1.88%. BoCom completed the issuance of the second tranche of 2026 tier-2 capital bonds on 23 July, with a size of 40 billion yuan and a coupon rate of 1.89%. This month, ICBC issued the fourth tranche of 2026 tier-2 capital bonds, with a size of 60 billion yuan and a coupon rate of 1.88%. After deducting issuance expenses, the proceeds from the above bonds will be used to replenish the banks' tier-2 capital.

To date, the total issuance of tier-2 capital bonds and perpetual bonds by banks this year amounts to approximately 1.23 trillion yuan. Large banks are the main issuers, accounting for over 67% of the total volume, and coupon rates are mostly below 2%. This month, ICBC also issued 20 billion yuan in perpetual bonds with a coupon rate of 1.89% for the first five years, adjustable every five years, and with an issuer call option at the fifth year and each subsequent coupon payment date; the proceeds will be used to replenish the bank's additional tier-1 capital. Meanwhile, BOC issued 30 billion yuan in write-down perpetual bonds this month, with a coupon rate of 1.91% for the first five years, also adjustable every five years and with an issuer call option at the fifth year and each subsequent coupon payment date.

In the first quarter of this year, there was a gap in bank issuance of tier-2 and perpetual bonds, but issuance has accelerated significantly since the second quarter. So far, 14 banks have issued tier-2 capital bonds, including the six largest banks, some joint-stock banks, a few city and rural commercial banks, and foreign banks. The total issuance has exceeded 710 billion yuan, with large banks issuing 595 billion yuan, accounting for more than 80%. For perpetual bonds, 23 banks—including large banks, joint-stock banks, city commercial banks, and private banks—have issued a total of 509 billion yuan this year, with large banks issuing 230 billion yuan, or about 45%.

Commercial banks have two main capital replenishment channels: internal capital replenishment, primarily through retained earnings, and external capital replenishment, including IPOs, rights issues, private placements, convertible bonds, perpetual bonds, and tier-2 capital bonds. Tier-2 capital bonds and perpetual bonds are both subordinated capital instruments; their repayment priority ranks below deposits and ordinary financial bonds, and they embed write-down or conversion clauses. Their core function is to strengthen banks' capital buffers, meet regulatory requirements, and thereby support bank credit expansion and mitigate asset risks.

As global systemically important banks, the large state-owned banks face stricter capital regulatory requirements while also bearing the mission of stabilizing the real economy and preventing risks. Last year, the Ministry of Finance issued the first tranche of 500 billion yuan in special government bonds, which were used to inject capital into BOC, CCB, BoCom, and Postal Savings Bank of China via private placements, raising a total of 520 billion yuan to replenish common equity tier-1 capital. The 2026 government work report stated that 300 billion yuan in special government bonds would be issued to support capital replenishment for large state-owned commercial banks.

According to data from the National Financial Regulatory Administration, at the end of the first quarter of 2026, the capital adequacy ratio of large commercial banks stood at 17.54%, down 0.62 percentage points from the previous quarter. In the first quarter, the net interest margin of commercial banks continued to decline; the net interest margin of large state-owned banks was 1.29%, down 0.01 percentage points quarter-on-quarter, the lowest among all types of banks.