Several Chinese banks on Monday announced that they have reached agreements with listed companies to provide loans for the companies to repurchase shares or for their shareholders to increase stock holding.
The first batch of banks making such announcements include Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Bank of China (BOC), Agricultural Bank of China (ABC), China Merchants Bank (CMB), and China CITIC Bank.
According to the banks’ announcements, the listed companies involved in the loan agreements include those with various ownership structures and those listed on the Main Board, STAR Market, and ChiNext.
That came after more than 20 companies listed on the Shanghai and Shenzhen stock exchanges on Sunday announced that either the companies themselves or their controlling shareholders had reached preliminary agreements with banks or received loan commitment letters for funding for stock buybacks or shareholding increases, involving a total of moare than 100 billion yuan.
Several banks have developed comprehensive plans for implementing the loan plan, covering customer access, account management, due diligence, risk control, and internal processes, according to industry insiders.
ICBC’s Beijing branch announced that it successfully processed a 1 billion yuan loan for stock buybacks for GigaDevice Semiconductor (603986.SH), a leader in integrated circuit design. T
CCB said that it reached agreements with companies such as Grg Metrology&Test Co Ltd (002967.SZ), Linglong Tire (601966.SZ), and Shandong Linuo Technical Glass (301188.SZ) to provide funds for stock buybacks and increasing holdings by shareholders. The enterprises include both state-owned and private, and the interest rate for loans is capped at 2.25%, it said.
BOC said that it signed agreements with six companies on such loans, including Sinopec (600028.SH), COSCO Shipping Energy Transportation (600026.SH), COSCO Shipping Holdings (601919.SH), and East Chip Technology (688110.SH).
So far, the bank has reached the intention of cooperation on the issue with nearly 100 companies, with loan commitments to 32 companies, covering industries such as integrated circuits, transportation, high-end manufacturing, and business services, it said.
ABC has so far approved stock buyback and shareholding increase loans for nine listed companies, involving a total of nearly 4 billion yuan, with discussion with another 80 companies under way.
CMB disclosed that after an internal meeting held shortly after the State Council press conference on September 24, it reached over 900 billion yuan in financing demand for buybacks and shareholding increases. The first batch of loans were granted to both state-owned enterprises and private companies, such as China Merchants Port (001872.SZ), China Merchants Shekou (001979.SZ), China Merchants Energy Shipping (601872.SH), and private companies like Vimicro (688612.SH) and WuHu Foresight Technology (301529.SZ).
CITIC Bank said that on October 20 it reached agreement with Muyuan Foods (002714.SZ), Maxwell Technologies (300751.SZ), and Jiahua Energy (600273.SH), involving industries such as smart agriculture, high-end intelligent equipment, and energy.
On September 24, Pan Gongsheng, the governor of the People’s Bank of China (PBOC), announced the creation of two new policy tools to support the capital market: a securities, fund, and insurance company swaps facility, and special relending facility to provide loans for listed companies’ stock buybacks and shareholding increases.
On October 18, PBOC, along with the National Financial Regulatory Administration and the China Securities Regulatory Commission (CSRC), officially launched to stock buyback and shareholding increase relending facility, with the initial quota set at 300 billion yuan, an annual interest rate of 1.75% and a one-year term. The loans are available to 21 national financial institutions, with interest rates capped at 2.25%.