Shanghai Dives, Banks Hit Hard On Fears Of New Capital Requirements

Rough night in Shanghai last night. The main stock index is now at a three-week low.

According to Shanghai Daily, there are fresh fears about capital raises at the country’s biggest banks:

The National Business Daily reported that Chinese regulatory bodies are mulling new rules under the framework of Basel III Accord, including the possibility to raise banks’ capital adequacy ratio from 11.5 per cent to 15 per cent by 2012, to boost banks’ ability to absorb risks. The measure may cause up to a total of one trillion yuan in capital deficit for five largest banks in China, according to the report. Elsewhere, the central bank declined to comment on the rumour that the central government may allow banks to raise deposit rates to as high as 10 per cent, according to the China Securities Journal. Banks suffered on concerns that the measures may dim their profits. Agricultural Bank of China shed 2.24 per cent to 2.62 yuan, below its initial public offering price for the first time. Bank of China fell 1.21 per cent to 3.26 yuan. Industrial and Commercial Bank of China lost 0.74 per cent to 4 yuan.

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