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 (BestGrowthStock) – 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.
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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.

Investing Research
($1=6.825 Yuan)
(Reporting by Langi Chiang, Aileen Wang and Simon Rabinovitch;
Editing by Alan Wheatley)

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