Central Huijin Investment Co, an investment arm of China's sovereign wealth fund, may ask a reduced dividends payout from state-run banks next year, China Daily reported on Thursday.
"As the largest shareholder of the nation's three biggest listed banks, Huijin may propose to lower the proportion of dividends to be allocated to shareholders at the board meeting of these banks next year," the newspaper quoted an anonymous source.
Conventionally, the nation's three major state-run lenders, the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB) and Bank of China (BOC) distribute some 40 percent of the profits they earn to shareholders, the report said.
If these three banks could be exempt from paying dividends to Central Huijin this year, the retained surplus could help them boost capital adequacy ratios by some 50 basis points, the report quoted Wang Han, a Hong Kong-based analyst at Guotai Jun'an Securities, as saying.
This is the latest effort by Central Huijin Investment Co., which takes a dominant position on the board of these banks on behalf of the Chinese government, to beef up the capital position of major Chinese banks, which are reportedly facing a capital shortage due to massive lending this year, the report said.
Another option the government investment unit may take would be to use the dividends it receives to buy new shares issued by the banks next year, China Daily cited the source as saying.
"It is still premature to get down to the details, as a final decision is likely only in April next year after the banks release their annual results," the newspaper quoted the source as saying.
