Industrial and Commercial Bank of China and Agricultural Bank of China cleared a key regulatory step on Wednesday, Nov. 11, when the Shanghai Stock Exchange approved their private placements of A shares worth up to 260 billion yuan (about $38.7 billion), according to The Asian Banker. Both banks received the exchange's review opinion on Nov. 11, Shanghai news outlet The Paper reported. The new shares will go to China's Ministry of Finance and China National Tobacco Corp. and will add to the two state lenders' core capital.

The exchange review covers up to 100 billion yuan for ICBC and 160 billion yuan for ABC, plus a placement of up to 15 billion yuan by insurer PICC, The Asian Banker reported, for a combined total of about 275 billion yuan. The deals still need registration with the China Securities Regulatory Commission before shares can be issued. For investors in Hong Kong and mainland China, the approval moves Beijing's second large bank recapitalization in two years from announcement toward execution.

Who is buying ICBC and ABC shares

The plan was first disclosed on Sunday, Sept. 6, when eight state-owned financial institutions announced capital measures totaling up to 360 billion yuan. In the banks' filings with the Shanghai exchange, the Ministry of Finance and China National Tobacco and certain of its subsidiaries were named as subscribers, according to a Xinhua report republished by the exchange.

China Daily gave the split. The finance ministry will take 200 billion yuan of the new shares, 70 billion yuan at ICBC and 130 billion yuan at ABC. China National Tobacco and its units will subscribe the remaining 60 billion yuan. Both banks said all net proceeds will go to core Tier-1 capital, the highest-quality layer that absorbs losses first.

Neither the Xinhua report nor China Daily gave an issue price. That number will matter to existing holders, since a placement priced below book value dilutes their stake in each bank's net assets.

The rest of the 360 billion yuan package goes to insurers and policy lenders. China Life Group is to receive 35 billion yuan, China Taiping 7 billion yuan, PICC Group up to 15 billion yuan and China Re up to 3 billion yuan, according to China Daily. The Export-Import Bank of China gets 30 billion yuan and China Export & Credit Insurance Corp. 10 billion yuan, all from the finance ministry.

How the special treasury bonds fund the deal

The money comes from special treasury bonds. China's 2026 government work report proposed 300 billion yuan of such bonds to replenish capital at large state-owned commercial banks. The first 150 billion yuan tranche was issued on Oct. 8, and the second is due at auction on Nov. 18, The Asian Banker reported.

This is the second round of its kind. In the spring of 2025, China Construction Bank, Bank of China, Bank of Communications and Postal Savings Bank of China received 520 billion yuan, according to Börsen-Zeitung. The 2026 round brings in the two state lenders that sat out that one.

Analysts quoted in state media have stressed that the banks are not in trouble. Dong Ximiao, chief researcher at Merchants Union Consumer Finance, called the move "not a crisis-driven rescue," China Daily reported, noting that major banks and insurers generally remain above regulatory capital and solvency requirements.

Thin margins behind the capital call

Weak profitability is part of the backdrop. Thin lending margins have held back earnings at the big state banks, and the squeeze continued into the third quarter, when China's big four banks reported further margin pressure.

With margins that thin, retained earnings alone add capital slowly. Fresh equity gives the two banks more room to grow loan books while staying above minimum ratios. Zeng Gang, president of the Tianfu Liyan Financial Research Institute, told China Daily that the 260 billion yuan of Tier-1 capital could support trillions of yuan in additional lending. Lou Feipeng, a researcher at Postal Savings Bank of China, said the move signaled closer coordination between fiscal and financial policy and a more proactive stance in support of growth.

Börsen-Zeitung read the injection as a sign that Beijing is harnessing the banks more closely to its economic goals. That trade-off, more lending on margins already under pressure, is what bank shareholders will weigh once pricing is set.

The approval came the same day the People's Bank of China published its third-quarter monetary policy report, which encouraged banks to price some floating-rate loans off DR001, an overnight repo rate, as an alternative to the loan prime rate, according to The Asian Banker. That followed the central bank's move to daily overnight reverse repo operations on Nov. 2.

The next milestones are the Nov. 18 bond auction and CSRC registration for the ICBC, ABC and PICC placements, after which the banks can set issue prices.