Banks raise record $14b offshore

"The top 10 listed banks in China all met capital requirements by the end of 2013, and lenders have taken various measures to replenish capital," said Raymond Yung, who covers financial services at PricewaterhouseCoopers LLP.

Lenders may continue to face a complicated financial environment and they should focus on the impact of interest rate liberalization and the entry of privately owned banks, said Yung.

Some lenders have also turned to the stock market to raise funds through preferred share issues, which were approved by regulators in April. Shanghai Pudong Development Bank Co Ltd, Agricultural Bank of China Co Ltd, Bank of China Co Ltd and Industrial Bank Co Ltd plan to issue preferred stocks with a combined value of some 240 billion yuan by the end of this month.

Recent targeted reserve requirement ratio cuts may also release some liquidity into the banking system, said analysts.

The cuts "would add liquidity, improve the money multiplier, boost bank lending and lower interest rates. We note that an RRR cut could be a good complement to an interest rate cut", said Chang Jian, analyst and economist at Barclays Research in a recent note.

Narrower interest rate differentials with foreign markets would reduce arbitrage incentives and capital inflows, resulting in a tightening of domestic liquidity, said Chang.

More lenders may be included in the targeted reserve cuts if they pass the central bank's exams by the end of June, reported China Economic Net on Monday.

Re-lending, targeted reserve ratio cuts or innovative financing tools may help to improve credit availability and reduce financing costs for specific sectors in the real economy, said Chang.

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