China warning spurs banks over bail-in debt plans

Competing for attention in global TLAC markets could drive up costs for Chinese lenders

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China’s central bank is forecasting that its top four lenders – which are among the world’s largest – will need to start issuing bail-in debt sooner than originally expected, and is warning that capital markets may not be ready to absorb the volumes involved, which may now coincide with large supply from western peers.

Systemically important banks must hold total loss-absorbing capacity (TLAC) equivalent to 16% of risk-weighted assets in 2019, rising to 18% of RWAs in 2022, according to rules

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