Via the PBOC:
To further promote the market-based legalization of “debt-to-equity swaps” and increase support for small and micro enterprises, the People’s Bank of China decided to reduce the large state-owned commercial banks, joint-stock commercial banks, and postal savings banks from July 5, 2018 onwards. The reserve ratio of RMB for urban and commercial banks, non-county rural commercial banks and foreign banks is 0.5%. Encourage five state-owned large-scale commercial banks and 12 joint-stock commercial banks to use directional RRR cuts and funds raised from the market to implement the “debt-to-equity swap” project in accordance with market-based pricing principles. Supporting the “debt-to-equity swap” implementation subject to truly exercise the rights of shareholders, participate in corporate governance, and promote mixed ownership reform. Targeted capital reduction does not support the projects of “name-share solid debt” and “zombie enterprise”. At the same time, postal savings banks, city commercial banks, non-county rural commercial banks and other small and medium-sized banks should mainly use the funds for small and micro enterprises to reduce their funding difficulties.
The PBC will continue to implement a stable and neutral monetary policy in accordance with the unified arrangements of the Party Central Committee and the State Council, grasp the strength and pace of structural deleveraging, and create a suitable monetary and financial environment for high-quality development and supply-side structural reforms.
