First Bank Convertible Bond Conversion and Capital Increase Approved This Year: Over 80 Small and Medium-sized Banks "Inject Capital"

21st Century Business Herald Reporter Ye Maishui

Chengdu Bank announced on March 7 that it recently received the Sichuan Financial Regulatory Bureau’s “Approval for Chengdu Bank’s Change of Registered Capital,” which permits an increase in registered capital from 3.736 billion RMB to 4.238 billion RMB, a 13.46% rise. This change is mainly due to the company’s early redemption of convertible bonds, leading to share capital expansion.

Chengdu Bank stated that it will handle the registration change procedures according to relevant regulations. The increase in registered capital will further strengthen the company’s capital position and provide a more solid foundation for future business development. Market analysts pointed out that after the conversion of the bonds, the company’s asset-liability structure will be optimized, helping to improve its core Tier 1 capital adequacy ratio and creating favorable conditions for subsequent expansion.

Public information shows that in March 2022, Chengdu Bank issued 8 billion RMB of A-share convertible bonds, which received 7,144.29 times oversubscription online, setting a record for domestic bank convertible bond issuance at that time. In April of the same year, the bonds were listed on the Shanghai Stock Exchange under the ticker “Chengyin Convertible Bond,” and entered the conversion period in September. By the end of 2024, as the stock price reached 130% of the conversion price for several consecutive trading days, triggering a conditional redemption clause, Chengdu Bank decided to exercise its early redemption rights.

As of the redemption registration date on February 5, 2025, a total of 7.995 billion RMB of “Chengyin Convertible Bonds” had been converted, with a conversion rate of 99.94%, totaling over 626 million shares, accounting for 17.34% of the total pre-conversion share capital. The remaining 49,090 bonds were redeemed, with a redemption payout of 4.941 million RMB. On February 6, 2025, the bonds were delisted from the Shanghai Stock Exchange, and Chengdu Bank’s total shares increased to 4.238 billion.

Public data shows that Chengdu Bank was established in December 1996, listed on the Shanghai Stock Exchange Main Board in early 2018, becoming Sichuan’s first listed bank and the eighth city commercial bank listed in A-shares nationwide. In 2023, the bank’s total assets surpassed one trillion RMB, making it the first city commercial bank in western China with such a scale. As of the third quarter of 2025, total assets reached 1.39 trillion RMB, a 10.81% increase from the beginning of the year; non-performing loan ratio was 0.68%, among the best levels for listed city commercial banks. In the first three quarters of 2025, the bank achieved revenue of 17.761 billion RMB, up 3.01% year-over-year; net profit attributable to shareholders was 9.493 billion RMB, up 5.03%.

This adjustment by Chengdu Bank is also a microcosm of the wave of capital replenishment among small and medium-sized banks in 2026. In recent years, China’s banking sector has maintained overall adequate capital levels, but structural differentiation is evident. Large and foreign banks generally have strong capital strength, while regional small and medium-sized banks face increasing capital pressure. According to data disclosed by the China Banking and Insurance Regulatory Commission, as of the end of Q4 2025, the average capital adequacy ratios of city commercial banks and rural commercial banks were 12.39% and 13.18%, respectively, both below the industry average of 15.46%; their non-performing loan ratios were 1.82% and 2.72%, higher than the industry average of 1.50%.

Under strict regulatory conditions, capital adequacy ratio and core Tier 1 capital adequacy ratio are the “lifelines” of banks. As some banks approach regulatory red lines, supplementing core Tier 1 capital has become a top priority. Consequently, bank financing activities are accelerating. As of early March 2026, more than 80 city commercial banks, rural commercial banks, and rural credit cooperatives have changed their registered capital, mostly through increases.

For example, Hubei Bank announced in early February that it had completed the issuance of 1.8 billion shares, increasing its total share capital to 9.412 billion shares, raising a total of 7.614 billion RMB; Guangzhou Bank recently announced on its official website that it plans to conduct capital increase and share expansion to further supplement capital, and is soliciting bids for related intermediary services through competitive consultation.

(Edited by: Qian Xiaorui)

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