China is set to spend US$40 billion to bail out debt-laden Agricultural Bank of China (
The funding will come from China's new forex investment agency, which will manage part of the country's foreign exchange reserves of more than US$1.33 trillion, the Economic Observer reported, citing unnamed sources.
The Chinese finance ministry was authorized early this year to issue 1.55 trillion yuan (US$204 billion) in bonds to fund the establishment of the agency, with the proceeds to buy forex reserves from the central bank.
Agricultural Bank is the last one of the big four state lenders to undergo a government-aided financial overhaul with the aim of eventually listing on the stock market.
State media has reported the troubled lender hopes to finish its restructuring plan this year.
The forex agency, which is expected to be set up next month, would use US$65 billion to take over the central bank's investment arm, Central Huijin Investment Corp (中央匯金投資公司), the Economic Observer said.
Central Huijin would then inject US$40 billion into the Agricultural Bank, the paper said.
China has injected a total of US$60 billion into the other three major banks -- Industrial and Commercial Bank of China (
Agricultural Banks' non-performing loan ratio stood at 23.44 percent at the end of last year, a notch lower than the figure of 26.17 percent recorded in 2005, the latest figures showed.
The non-performing loan ratio across China's banking sector was 8.98 percent in June and was expected to fall to approximately 5 percent next year, China Banking Regulatory Commission chief Liu Mingkang (劉明康) said last month.
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